FUMA INTERNATIONAL LLC v. R.J. REYNOLDS VAPOR COMPANY

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

FUMA INTERNATIONAL LLC, )

)

Plaintiff, )

)

v. ) 1:19-CV-260

) 1:19-CV-660

R.J. REYNOLDS VAPOR )

COMPANY, )

)

Defendant. )

Memorandum Opinion and Order

Catherine C. Eagles, District Judge.

The plaintiff, Fuma International LLC, has sued the defendant, R.J. Reynolds

Vapor Company, for infringing two electronic cigarette patents. RJR has filed two

Daubert motions to exclude the testimony of Fuma’s expert, Dr. Glenn Vallee. One is

directed at his testimony on copying and willful infringement and the other is directed at

his testimony on secondary considerations of nonobviousness. The motions will be

granted to the extent Dr. Vallee bases his opinions on non-technical analysis within the

capacity of the jury, and otherwise will be denied.

I. Overview

Fuma accuses two of RJR’s vaping products, the VUSE Ciro and the VUSE Solo,1

of willful infringement of two patents issued to Fuma: U.S. Patent Nos. 9,532,604 (’604

1 There are two versions of the Solo: the “Gen 1” and “Gen 2.” Fuma alleges that both

versions violate the patents-in-suit, and the parties agree that the differences are immaterial for

patent), see Doc. 76-2, and 10,334,881 (’881 patent). See Doc. 76-3. Both patents apply

to each accused product. The Court previously construed various disputed terms in each

of the patents. Doc. 95.

At summary judgment, the Court found no disputed questions of material fact as to

several infringement issues and determined that the Ciro infringes the ’604 and ’881

patents and that the Solo infringes the ’881 patent. Doc. 139. The matter is set for trial to

determine, among other things, whether the patents-in-suit are valid and whether RJR’s

infringement was willful.

RJR has filed two Daubert motions to exclude certain testimony by Dr. Vallee, a

professor of mechanical engineering proffered as an expert witness by Fuma on the issues

of willful infringement, Doc. 156, and patent validity. Doc. 163.2 Dr. Vallee has a

professional background in quality assurance, mechanical engineering, and consumer

product design and development, including mechanical and electromechanical products.

Doc. 120-4 at ¶¶ 4–6. He has experience with the design of a “wide variety of products

containing threaded connections, heating elements, and liquid/air fluid flow.” Id. at ¶ 5.

Expert testimony is admissible if it “rests on a reliable foundation and is

relevant[.]” Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993). Whether

expert evidence is reliable is primarily a question of the validity of the expert’s

methodology, not the conclusions reached. In re Lipitor (Atorvastatin Calcium) Mktg.,

purposes of this motion. See Doc. 120 at 4; Doc. 120-1 at ¶ 27. The Court will refer to the

“Solo” for ease of reading.

2 Dr. Vallee’s expected testimony is before the Court in the form of reports.

Sales Pracs. & Prods. Liab. Litig., 892 F.3d 624, 631 (4th Cir. 2018); Summit 6, LLC v.

Samsung Elecs. Co., 802 F.3d 1283, 1295–96 (Fed. Cir. 2015).

II. Dr. Vallee’s Testimony on Copying and Willful Infringement

If RJR willfully infringed the patents-in-suit as Fuma alleges, Doc. 1 at ¶¶ 176–78,

Fuma may receive increased damages. 35 U.S.C. § 284; Halo Elecs., Inc. v. Pulse Elecs.,

Inc., 136 S. Ct. 1923, 1930 (2016) (“This Court . . . described § 284 . . . as providing that

‘punitive or increased damages’ could be recovered ‘in a case of willful or bad-faith

infringement.’”). On the question of willful infringement, Dr. Vallee is expected to

testify that RJR copied Fuma’s e-cigarette design, that RJR rejected other e-cigarette

designs that do not resemble its Solo and Ciro products, and that RJR’s conduct fell

below industry standards of behavior. See Doc. 157-1 at ¶¶ 15, 92–122; Doc. 157-2 at

¶¶ 90–114. RJR seeks to exclude this testimony as unreliable under Federal Rule of

Evidence 702 and Daubert. Doc. 156.

Willful infringement is a question of fact. Polara Eng’g Inc. v. Campbell Co., 894

F.3d 1339, 1353 (Fed. Cir. 2018). To establish willfulness, the patentee must show the

accused infringer had the subjective intent to infringe at the time of the challenged

conduct. Halo Elecs., Inc., 136 S. Ct. at 1933. The Federal Circuit has defined

subjective willfulness as “proof that the [accused infringer] acted despite a risk of

infringement that was ‘either known or so obvious that it should have been known to

[it].’” Arctic Cat Inc. v. Bombardier Recreational Prods. Inc., 876 F.3d 1350, 1371 (Fed.

Cir. 2017) (quoting WesternGeco LLC v. ION Geophysical Corp., 837 F.3d 1358, 1362

(Fed. Cir. 2016), rev’d on other grounds, 138 S. Ct. 2129 (2018)). In assessing the

accused infringer’s willfulness, the factfinder looks to the totality of the circumstances.

See Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337,

1342–43 (Fed. Cir. 2004) (en banc).

A. Copying

Evidence that an alleged infringer intentionally copied the ideas or design of a

patent holder is relevant to willfulness. See C R Bard Inc. v. AngioDynamics, Inc., 979

F.3d 1372, 1380 (Fed. Cir. 2020) (noting that evidence of intentional copying “support[s]

a jury verdict of willfulness”); Eko Brands, LLC v. Adrian Rivera Maynez Enters., Inc.,

946 F.3d 1367, 1379 (Fed. Cir. 2020) (stating that a factfinder can “properly consider”

intentional copying to determine willfulness). Dr. Vallee opines that RJR copied Fuma’s

claimed invention and provides reasons for his opinion. Doc. 120-4 at ¶¶ 95–117. RJR

says this opinion is inadmissible because it lacks the technical analysis required under

Federal Rule of Evidence 702. Doc. 157 at 12–17.

RJR is correct that some of the reasons Dr. Vallee proffers to support his

conclusion of copying do not involve technical analysis. For example, he summarizes

evidence about RJR’s search for new e-cigarette designs, internal communications

between RJR employees lauding Fuma’s e-cigarette design, and internal RJR documents

in which RJR employees discuss the importance of replicating existing technologies

during the e-cigarette design process. Doc. 120-4 at ¶¶ 95–96, 99, 104, 108, 110, 113.

None of this evidence involves technical considerations and a jury does not need an

expert’s help to evaluate it.

But Dr. Vallee’s opinion is also based on technical analysis on several different

points. He discusses technical design similarities between Fuma’s patented e-cigarette

design and RJR’s Solo and Ciro products, such as a transverse heating element and

central airflow passageway. Doc. 120-4 at ¶¶ 102–03; Doc. 157-2 at ¶¶ 104–06. His

testimony that RJR rejected alternative designs different from Fuma’s patented

technology when developing the Solo and Ciro necessarily involves a technical analysis

of those alternative designs. Doc. 120-4 at ¶¶ 111–12. He also uses a technical analysis

to explain his opinion that RJR’s argument that Fuma’s e-cigarette design was different

than its own is not valid, and that RJR’s portrayal of Fuma’s e-cigarette design could not

electrically function. Doc. 157-2 at ¶¶ 108–09.

At bottom, Dr. Vallee’s opinion that RJR copied Fuma’s design is grounded in a

technical analysis and will help the jury determine whether RJR intended to copy Fuma’s

claimed invention when designing the Solo and Ciro e-cigarettes. It is relevant to the

question of willfulness and reliable because it is grounded in Dr. Vallee’s expertise as a

mechanical engineer and consumer product designer. Doc. 120-4 at ¶¶ 4–6. But to the

extent that Dr. Vallee analyzes or summarizes non-technical circumstantial evidence to

conclude that RJR copied Fuma’s claimed inventions, his testimony will not be helpful to

the jury and will be excluded. See Persinger v. Norfolk & W. Ry. Co., 920 F.2d 1185,

1188 (4th Cir. 1990) (“Rule 702 excludes expert testimony on matters within the

common knowledge of jurors.”); Kumho Tire Co. v. Carmichael, 526 U.S. 137, 148–49

(1999) (explaining that an expert’s reliability stems from testimony rooted in her

expertise).

B. Intent, Motive, or State of Mind

Expert testimony about an alleged infringer’s intent, motive, or state of mind is

inadmissible. See In re Rezulin Prods. Liab. Litig., 309 F. Supp. 2d 531, 545–47

(S.D.N.Y. 2004). First, intent is a question for the trier of fact that does not require

expert testimony. See BorgWarner, Inc. v. Honeywell Int’l, Inc., 750 F. Supp. 2d 596,

611 (W.D.N.C. 2010). Second, expert testimony concerning state of mind, intent, or

purpose is unreliable because it is not grounded in analytically sound principles or

methods. See DePaepe v. General Motors Corp., 141 F.3d 715, 720 (7th Cir. 1998).

And the parties agree that no expert can provide testimony concerning the ultimate issue

of intent or RJR’s motives and state of mind. Doc. 157 at 17–20; Doc. 181 at 13–14. Dr.

Vallee also notes throughout his report that he has not been asked to opine on the ultimate

issue of willfulness. See, e.g., Doc. 120-4 at ¶¶ 15, 39, 93.

Despite this, Dr. Vallee’s report contains at least two explicit opinions about

intent. See, e.g., id. at ¶ 122 (asserting a particular failure by RJR “tends at least to show

an intent to hide RJR’s knowledge of and copying of the Fuma patented e-cigarette”); id.

at ¶ 95 (asserting that RJR “intentionally copied the Fuma patented design”). His report

also contains other opinions about RJR and its employees’ intent and motives, even if

those exact words are not used. Id. at ¶ 121 (stating his conclusion about “the reason the

Fuma patented design was . . . copied by RJR”). This will not be allowed at trial.

But Dr. Vallee is not prohibited from providing opinions about technical aspects

of RJR’s alleged infringement that could support a finding of specific intent to infringe.

As already noted, Dr Vallee may testify about the technical design similarities that

support his opinion that RJR copied FUMA’s design, id. at ¶¶ 102–03, 116, about the

dissimilar technology in alternative designs that RJR rejected when developing the Solo

and Ciro, id. at ¶¶ 111–12, and about the absence of concept sketches or other documents

created by RJR that show it independently developed the Solo and Ciro. Id. at ¶ 114.

C. Pre-Patent Conduct

RJR maintains that Dr. Vallee’s opinions concerning copying and willfulness are

unreliable because his testimony concerns RJR’s conduct before Fuma’s ‘604 and ‘881

patents issued. Doc. 157 at 20–21. This argument is without merit because pre-patent

conduct can be relevant and helpful to the jury, and it would be so here.

The factfinder evaluates willfulness in light of the totality of the circumstances,

see Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH, 383 F.3d at 1342–43, of which

pre-patent conduct can be a part. See Minnesota Mining & Mfg. Co. v. Johnson &

Johnson Orthopaedics, Inc., 976 F.2d 1559, 1581 (Fed. Cir. 1992). Although

“[k]nowledge of the patent alleged to be willfully infringed [is a] prerequisite to

enhanced damages,” WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 (Fed. Cir. 2016),

pre-patent conduct, such as copying, is still relevant to an alleged infringer’s subjective

intent. See Sonos, Inc. v. D&M Holdings Inc., No. 14-1330-WCB, 2017 WL 5633204, at

*3–4 (D. Del. Nov. 21, 2017) (collecting cases).

The fact that Dr. Vallee’s opinions supporting Fuma’s claims about copying and

willfulness include testimony about RJR’s pre-patent conduct is not a basis to exclude his

opinions. The pre-patent conduct, which the Court need not summarize here, is highly

probative of RJR’s intent and motives.

D. Acting Inconsistently with Industry Standards of Behavior

The parties appear to agree that whether an infringer complied with or acted

inconsistently with industry standards is generally relevant to willfulness. See Doc. 157

at 22–26; Doc. 181 at 17–22. But Dr. Vallee’s opinions purporting to measure RJR’s

conduct against industry standards, Doc. 120-4 at ¶¶ 94, 100, will not be helpful to the

jury. The opinion of an expert is not required to point out that patent infringement is

inconsistent with internal RJR policies. Id. at ¶ 94. Dr. Vallee’s assertions about

industry practice are overbroad and conclusory, and none of his observations are clearly

rooted in his professional experience. Id. at ¶¶ 94, 100. As with some other parts of his

testimony, he is summarizing evidence that does not require technical assistance to

understand. This testimony will be excluded.

E. Other Issues Pertaining to Willfulness

RJR contends that legal conclusions about willfulness within Dr. Vallee’s

expert reports are inadmissible. Doc. 157 at 26–27. It also objects to Dr. Vallee’s

statements about RJR’s failure to produce opinions of counsel as evidence that RJR had

no reasonable basis for believing it did not infringe. Id. at 27. Fuma states that Dr.

Vallee will not testify about either issue at trial. Doc. 181 at 23–24. The motion is

therefore granted in part and denied in part to this extent: if and when Fuma intends to

elicit such testimony, Fuma shall advise the Court and RJR outside the presence of the

jury. The Court will otherwise address any such problems if and when they arise at trial.

RJR also asserts that Dr. Vallee should not be permitted to testify about Fuma’s

reasons for waiting two years to assert infringement, as he is not qualified to give an

opinion on the matter. Doc. 157 at 28. As discussed supra, Dr. Vallee’s expert opinion

must be rooted in his specialized knowledge. See Kumho Tire Co., 526 U.S. at 148–49.

His opinions about a litigant’s tactical reasons for delaying patent litigation are beyond

his expertise and will be excluded. Fuma notes that Dr. Vallee was responding to the

testimony of RJR’s expert, Dr. John M. Collins, who Fuma says also offers testimony

about Fuma’s reasons for delay in asserting its patent rights. Doc. 181 at 25. No motion

is pending as to any similar aspect of Dr. Collins’s expected testimony, which can be

evaluated by the same standards as Dr. Vallee’s proffered testimony if and when Dr.

Collins so testifies.

III. Dr. Vallee’s Testimony on the Secondary Considerations of Nonobviousness

RJR raised the affirmative defense that Fuma’s claimed inventions were obvious

at the time it filed for patent protection, and therefore Fuma’s ‘604 and ‘881 patents are

invalid for failing to satisfy the requirements of 35 U.S.C. § 103. See Doc. 53 at 8–9.

RJR has the burden of proof to show that Fuma’s ‘604 and ‘881 patents are not valid. 35

U.S.C. § 282(a); see also Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 100 (2011). In

support of this defense, RJR expects to offer expert testimony from Dr. Collins. Fuma

expects to offer testimony from Dr. Vallee to rebut the testimony of Dr. Collins, which

RJR now seeks to exclude via Daubert motion. Doc. 163.

A. Obviousness and Secondary Considerations of Nonobviousness

To receive patent protection, a claimed invention must, among other things, have

been nonobvious at the effective filing date of the invention. See 35 U.S.C. § 103;

Microsoft Corp., 564 U.S. at 96. “[A]n alleged infringer may assert the invalidity of the

patent—that is, he may attempt to prove that the patent never should have issued in the

first place.” Microsoft Corp., 564 U.S. at 96. One way to prove a patent’s invalidity is

by showing that a claimed invention “would have been obvious before the effective filing

date of the claimed invention to a person having ordinary skill in the art to which the

claimed invention pertains.” 35 U.S.C. § 103; Microsoft Corp., 564 U.S. at 96.

In determining whether a patent would have been “obvious” at the time of its

effective filing date, the Federal Circuit has set forth various factors that may “serve to

‘guard against slipping into use of hindsight,’ and to resist the temptation to read into the

prior art the teachings of the invention in issue.” Apple Inc. v. Samsung Elecs. Co., 839

F.3d 1034, 1052 (Fed. Cir. 2016) (quoting Graham v. John Deere Co., 383 U.S. 1, 36

(1966)). These factors are known as “secondary considerations,” or “objective indicia of

non-obviousness,” and they include:

(1) commercial success enjoyed by devices practicing the patented

invention;

(2) industry praise for the patented invention;

(3) copying by others; and

(4) the existence of a long-felt but unsatisfied need for the invention.

Id.

For evidence of these secondary considerations to be probative of nonobviousness,

the patentee must establish a nexus between the secondary considerations and the claimed

invention. Wyers v. Master Lock Co., 616 F.3d 1231, 1246 (Fed. Cir. 2010). For

example, for a product’s “commercial success” to support nonobviousness, that success

must be a direct result of the claimed invention—not some other feature within the

product or the product as a whole. See id.; In re GPAC Inc., 57 F.3d 1573, 1580–81

(Fed. Cir. 1995).

B. Dr. Vallee’s Opinions

Generally, Dr. Vallee is expected to discuss the patented design, which he states

placed a “heating coil and wick transversely across a central airflow passageway” and

surrounded the “passageway and heating coil with a solution holding medium.” Doc.

164-1 at ¶ 298. According to Dr. Vallee, Fuma’s design “enhance[d] the vaporization of

the e-liquid and improve[d] the user experience,” thus removing a burnt metallic taste

when vaping. Id. at ¶¶ 293, 306.

Dr. Vallee is also expected to testify that there is a nexus between several

secondary considerations of nonobviousness and Fuma’s claimed invention. As

previously discussed, Dr. Vallee will offer the opinion that RJR, and others within the e-

cigarette industry, copied Fuma’s patented invention. Id. at ¶¶ 296–99. He will also

testify that Fuma’s patented invention met a long-felt but unmet need in the e-cigarette

industry, id. at ¶¶ 300–09, that RJR and the e-cigarette industry praised Fuma’s patented

invention, id. at ¶ 310, that the products embodying Fuma’s patented invention enjoyed

commercial success, id. at ¶¶ 311–14, and that Fuma’s patented invention departed from

accepted wisdom in the field. Id. at ¶ 315.

RJR first contends that Dr. Vallee’s testimony is inadmissible because he fails to

establish a nexus between the secondary considerations of nonobviousness and Fuma’s

claimed inventions. Doc. 164 at 13–28. But on this point RJR does nothing more than

attack the merits of Dr. Vallee’s opinions, not his methodology. Summit 6 LLC, 802 F.3d

at 1296.

Whether a nexus exists between a claimed invention and secondary considerations

of nonobviousness is a question for the factfinder. See Apple Inc., 839 F.3d at 1052–57;

Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699 F.3d

1340, 1349 (Fed. Cir. 2012). As such, parties are entitled to present evidence that a

nexus exists between a claimed invention and secondary indicia of nonobviousness,

including expert testimony. See Apple Inc., 839 F.3d at 1052–57. At trial, RJR can

challenge Dr. Vallee’s opinion that a nexus exists between Fuma’s claimed inventions

and secondary considerations of nonobviousness with “[v]igorous cross-examination

[and] presentation of contrary evidence.” Daubert, 509 U.S. at 596.

RJR also maintains that Dr. Vallee’s testimony concerning each secondary

consideration of nonobviousness is inadmissible because it lacks scientific and technical

analysis. As with his testimony on copying, this argument has some merit but is not

accurate as to all of Dr. Vallee’s testimony.

Part of Dr. Vallee’s testimony concerns the technical intricacies of Fuma’s

claimed invention, RJR’s products, and other e-cigarette designs. Those opinions are

relevant and reliably grounded in his expertise as a mechanical engineer and consumer

product designer and are therefore admissible. Doc. 120-4 at ¶¶ 46. For example, Dr.

Vallee discusses how Fuma’s claimed invention met a long-felt but unmet need because

its design led to “enhanced vaporization of e-liquid” and “removed a burnt metallic taste

when vaping.” Doc. 164-1 at ¶¶ 293, 306. He also reviewed other e-cigarette designs

and concluded that they emulated Fuma’s claimed invention. Id. at ¶ 298. This sort of

testimony is helpful to the jury because it precisely identifies the technical basis for Dr.

Vallee’s conclusion that a nexus exists between secondary considerations of

nonobviousness and Fuma’s claimed inventions.

Dr. Vallee, however, also draws conclusions that are unrelated to his specialized

knowledge. For example, Dr. Vallee concludes that there was a nexus between industry

praise and Fuma’s claimed invention, in part based on an RJR executive’s complimentary

description of Fuma’s e-cigarette as “providing the closest experience to a burn-type

cigarette as compared to all the other e-cigarette devices that [the executive] had been

evaluating.” Id. at ¶ 310. But a jury does not need expert assistance to evaluate whether

an RJR executive’s statement constitutes praise.

In sum, where Dr. Vallee uses his specialized knowledge to discuss the claimed

invention’s design and its relation to secondary considerations of nonobviousness, his

expert opinion will be helpful to the jury and is reliable and relevant. But Dr. Vallee’s

statements about secondary considerations of nonobviousness in which he summarizes

non-technical evidence and draws conclusions from that evidence are inadmissible.

Those opinions are not rooted in Dr. Vallee’s expertise and are therefore unreliable. See

Kumho Tire Co., 526 U.S. at 148–49.

C. Presumption of Nexus

The parties argue about whether a presumption of nexus applies between the

products embodying Fuma’s patented invention and secondary considerations of

nonobviousness, Doc. 182 at 34; Doc. 198 at 5–6, but the Court does not need to resolve

that question to resolve the pending motions. It is a more appropriate issue to discuss at

the close of the evidence and, if appropriate, during the charge conference, since it turns

on questions of fact. See Fox Factory, Inc. v. SRAM, LLC, 944 F.3d 1366, 1373 (Fed.

Cir. 2019) (“Whether a product is coextensive with the patented invention, and therefore

whether a presumption of nexus is appropriate in a given case, is a question of fact.”).

IV. Conclusion

Expert testimony must be relevant and reliable. Where an expert bases his

conclusions on non-technical analysis or circumstantial evidence that a jury can

independently understand, the expert’s opinion is not reliable because it is not rooted in

his expertise. Here, some of Dr. Vallee’s testimony concerning willfulness, copying, and

secondary considerations of nonobviousness relies on non-technical analysis that is

unreliable and unhelpful to the jury. Accordingly, that part of his testimony is

inadmissible. But not all of Dr. Vallee’s expert opinion is non-technical. Where Dr.

Vallee’s opinions are rooted in a technical analysis on issues relevant to willfulness,

copying, and secondary considerations of nonobviousness, his testimony is admissible.

It is ORDERED that the defendant’s Daubert motions to exclude testimony and

opinions of Dr. Glenn Vallee on issues of copying and infringement, Doc. 156, and

secondary considerations of nonobviousness, Doc. 163, are GRANTED IN PART and

DENIED IN PART as stated herein and as summarized here:

1. Testimony by Dr. Vallee based on non-technical analysis within the capacity of

the jury will be excluded.

2. Testimony by Dr. Vallee that relies on technical analysis rooted in his expertise

will not be excluded.

3. Testimony by Dr. Vallee about industry practice and RJR’s internal standards

will be excluded.

4. Testimony by Dr Vallee offering opinions on motive, intent, or willfulness will

be excluded.

5. Testimony by Dr. Vallee about RJR’s failure to produce opinions of counsel as

evidence will be excluded unless Fuma obtains advance permission from the

Court outside the presence of the jury.

This the 15th day of October, 2021.

Gees T JUDGE

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