OPTOLUM INC. v. CREE INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

OPTOLUM, INC., )

)

Plaintiff, )

)

v. ) 1:17CV687

)

CREE, INC., )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

ON DEFENDANT’S MOTION FOR JUDGMENT AS A MATTER OF LAW

AS TO WILLFUL INFRINGEMENT

OSTEEN, JR., District Judge

This matter comes before the court on Defendant Cree,

Inc.’s Motion for Judgment as a Matter of Law under Federal Rule

of Civil Procedure 50(a) Regarding Lack of Willfulness, (Doc.

323). Plaintiff OptoLum, Inc., responded, (Doc. 330), and

Defendant replied, (Doc. 332). This court granted Defendant’s

motion. (Minute Entry 11/03/2021). This Order supplements this

court’s findings made in open court granting judgment as a

matter of law (“JMOL”) as to willful infringement and further

explains this court’s reasoning. Although these issues may be

moot as a result of the jury’s verdict, the parties are entitled

to consider this court’s reasoning in full for purposes of any

JMOL motion or appeal.

I. BACKGROUND

Plaintiff sued Defendant for infringement of two of

Plaintiff’s patents, U.S. Patent Nos. 6,831,303 and 7,242,028

(the “Asserted Patents”). Plaintiff claims that Defendant

willfully infringed the Patents.

During Plaintiff’s case-in-chief, it presented evidence

through the testimony of several witnesses, including Joel Dry,

Charles McCreary, William Scally, and Brent York. Mr. Dry

testified that in 2003 he spoke at a roundtable discussion at

the Blue 2003 Conference. Mr. Dry testified that he showed his

BL-800 prototype during that discussion, and that John Edmond,

one of Cree’s founders, spoke with Mr. Dry about his prototype.

Mr. Dry testified that Mr. Edmond looked at the prototype, and

Mr. Dry discussed the prototype with Mr. Edmond. Mr. Dry also

testified that shortly before the Blue 2003 Conference, he

received a patent (the “‘536 Patent”) for the technology in his

prototype. Mr. Dry testified he would have mentioned that he had

received a patent at the conference because he was proud of

receiving a patent, but he would not have used the name or

number of the patent.

Mr. Scally testified about Cree’s failure in developing an

LED bulb and the importance of being first to market with an LED

bulb that looked like an incandescent bulb. Mr. York testified

that he viewed OptoLum’s technology as revolutionary because

well-known companies were trying and failing to develop a

similar LED bulb. Finally, Plaintiff presented evidence of

direct infringement through Mr. McCreary, who testified he

believes that Cree’s products infringed the Asserted Patents.

At the close of Plaintiff’s case, Defendant moved for JMOL

as to willful infringement. (Doc. 323.) Defendant argues that

Plaintiff failed to meet its burden to establish willful

infringement. Following presentation of Defendant’s evidence,

this court granted Defendant’s motion to dismiss the willful

infringement claim.

II. STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 50, after “a party

has been fully heard on an issue during a jury trial[,]” a party

may make a motion asking the court to enter judgment as a matter

of law. Fed. R. Civ. P. 50(a). This motion is made before a case

is submitted to the jury and, to grant the motion, requires a

finding that no reasonably jury could find for the opposing

party. Fed. R. Civ. P. 50(a)(2). “Judgment as a matter of law is

only appropriate if, viewing the evidence in the light most

favorable to the non-moving party, the court concludes that ‘a

reasonable trier of fact could draw only one conclusion from the

evidence.’” Corti v. Storage Tech. Corp., 304 F.3d 336, 341 (4th

Cir. 2002) (quoting Brown v. CSX Transp., Inc., 18 F.3d 245, 248

(4th Cir. 1994)). “[I]f the nonmoving party [has] failed to make

a showing on an essential element of his case with respect to

which he had the burden of proof[,]” JMOL should be granted.

Wheatley v. Wicomico Cnty., 390 F.3d 328, 332 (4th Cir. 2004)

(internal quotation marks omitted) (quoting Singer v. Dungan, 45

F.3d 823, 827 (4th Cir. 1995)).

III. ANALYSIS

“Willful infringement is a question of fact.” Bayer

Healthcare LLC v. Baxalta Inc., 989 F.3d 964, 987 (Fed. Cir.

2021) (citation omitted). “To establish willfulness, the

patentee must show the accused infringer had a specific intent

to infringe at the time of the challenged conduct.” Id. (citing

Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 136 S. Ct.

1923, 1933 (2016)). “As the Supreme Court stated in Halo, ‘[t]he

sort of conduct warranting enhanced damages has been variously

described in our cases as willful, wanton, malicious, bad-faith,

deliberate, consciously wrongful, flagrant, or – indeed –

characteristic of a pirate.’” Id. (quoting Halo Elecs., 136

S. Ct. at 1932). However, “[t]he concept of ‘willfulness’

requires a jury to find no more than deliberate or intentional

infringement.” Eko Brands, LLC v. Adrian Rivera Maynez Enters.,

Inc., 946 F.3d 1367, 1378 (Fed. Cir. 2020) (citation omitted).

Willful infringement requires that the defendant (1) know of the

Asserted Patents; and (2) know that the defendant’s actions

constitute infringement. See Bench Walk Lighting LLC v. LG

Innotek Co., Civil Action No. 20-0051-RGA, 2021 WL 1226427, at

*15 (D. Del. March 31, 2021).

In Bayer Healthcare LLC v. Baxalta Inc., the Federal

Circuit upheld the district court’s grant of JMOL of no willful

infringement. 989 F.3d at 987. During trial, the district court

concluded that the plaintiff failed to present sufficient

evidence of the “state of mind” necessary for a finding of

willfulness. Id. According to the district court, there was no

dispute that the defendant was aware of the patent-at-issue and

that the plaintiff assumed that the defendant knew the accused

product infringed because it involved a similar item as the

patent-at-issue. Id. (“Bayer merely ‘assume[d] that [Baxalta]

knew [the accused product] infringed because it involved

pegylation at the B-domain of factor VIII.’”). However, the

district court concluded that this was not enough for a

reasonable juror to find that infringement was “either known or

so obvious it should have been known.” Id. (quoting Halo Elecs.,

136 S. Ct. at 1930).

On appeal, the plaintiff, Bayer, identified evidence that

purportedly satisfied the state of mind requirement for

willfulness. Id. Bayer presented the following testimony:

testimony of the defendant’s witnesses concerning their

awareness of the patent application that issued the patent-at-

issue; and evidence that the defendant found out about the

plaintiff’s work that underpinned the patent-at-issue and

resolved a previous failure of the defendant’s product, and that

the defendant then consciously switched to using the same

ingredient as in the plaintiff’s product in the accused product.

Id. at 987-88. The Federal Circuit found that even accepting the

plaintiff’s evidence as true and weighing all inferences in

favor of the plaintiff, the record was insufficient to establish

that the defendant’s conduct rose to the level of bad-faith

behavior required for a finding of willful infringement. Id. at

988. The Federal Circuit characterized the evidence as merely

demonstrating the defendant’s knowledge of the patent-at-issue

and direct infringement of the asserted claims. Id. Therefore,

the Federal Circuit concluded “[k]knowledge of the asserted

patent and evidence of infringement is necessary, but not

sufficient, for a finding of willfulness. Rather, willfulness

requires deliberate or intentional infringement.” Id. (citing

Eko Brands, LLC, 946 F.3d at 1378).

This court finds that the evidence presented by Plaintiff

does not demonstrate as a matter of law that Cree willfully

infringed the Asserted Patents. Plaintiff offered some evidence

that Defendant infringed the Asserted Patents through the

testimony of Mr. McCreary. But Plaintiff offered no evidence

that anyone at Cree was aware of the Asserted Patents at the

time of the creation of the accused products. Plaintiff argues

that knowledge of a parent patent is evidence of knowledge of

the Asserted Patents. (Doc. 330 at 6.) The evidence from

Mr. Dry’s testimony is that he likely mentioned he had received

a patent for the technology in the BL-800, but he would not have

mentioned the name or number of the patent. The ‘536 Patent,

which is the parent patent to the Asserted Patents, is the

patent Mr. Dry received shortly before Blue 2003.

Even assuming that the limited evidence of Cree’s knowledge

of the ‘536 Patent is sufficient to demonstrate knowledge of the

Asserted Patents, Plaintiff presented no evidence that Cree’s

accused products were created by deliberate or reckless

infringement as opposed to innocent independent development. For

example, Plaintiff offered no evidence that Defendant’s internal

documents bear similarities to the Asserted Patents and

Plaintiff’s internal documents. See Simo Holdings Inc. v. Hong

Kong uCloudlink Network Tech. Ltd., 396 F. Supp. 3d 323, 334

(S.D.N.Y. 2019) (finding the jury’s finding of willfulness was

supported by sufficient evidence where the defendant was at

least familiar with the parent patent, the defendant’s internal

documents were similar to the asserted patent and the

plaintiff’s internal documents, and one of the defendant’s

employees was hired from the plaintiff and took several of the

plaintiff’s confidential files with him). Nor did Plaintiff

offer evidence of any prior disputes over the Asserted Patents

or licenses between OptoLum and Cree. See Mondis Tech. Ltd. v.

LG Elecs., Inc., 407 F. Supp. 3d 482, 502 (D.N.J. 2019), appeal

dismissed, 6 F.4th 1379 (2021) (denying JMOL on no willfulness

where “the parties had been litigating and negotiating licenses

regarding the [asserted] patents” and the parties had entered

settlement agreements regarding the defendant’s infringement of

other patents owned by the plaintiff”). Similarly, Plaintiff

offered no evidence of any statement of Cree that it planned to

copy the Asserted Patents. See Tinnus Enters., LLC v. Telebrands

Corp., 369 F. Supp. 3d 704, 731 (E.D. Tex. 2019) (denying JMOL

as to willfulness because “the jury heard sufficient evidence of

[the defendant’s] willful infringement, including emails between

[the defendant’s] employees and an outside consultant describing

how [the defendant] planned to copy Plaintiff’s product”). Nor

did Plaintiff offer evidence of prior business dealings between

Cree and OptoLum to support an inference that Cree should have

believed it required a license from OptoLum. See Georgetown Rail

Equip. Co. v. Holland L.P., 867 F.3d 1229, 1245 (Fed. Cir. 2017)

(upholding the district court’s finding that substantial

evidence supported the jury verdict where the jury heard

evidence of the defendant’s awareness of the patent-at-issue,

and evidence of the parties’ prior business dealings could

reasonably lead the defendant to believe it needed to obtain a

license from the plaintiff to avoid infringement). In sum,

Plaintiff offered no evidence of prior business dealings or

circumstantial evidence of Cree copying the technology in the

Asserted Patents. See KAIST IP US LLC v. Samsung Elecs. Co., 439

F. Supp. 3d 860, 884 (E.D. Tex.), appeal dismissed, 2020 WL

9175080 (Fed. Cir. Sept. 3, 2020) (denying JMOL on willfulness

where the plaintiff presented evidence that the defendant was

aware of the patent-at-issue, and that the parties had prior

business dealings from which the jury could infer that the

defendant should have believed it needed a license).

Plaintiff relies in part on Cree’s incentive to develop a

product for purposes of profitability and brand development,

coupled with Mr. York’s testimony that the only technology that

enabled the Cree bulb, as evidence that requires a jury

determination of willfulness. (Doc. 330 at 8.) This court

disagrees. First, while financial gain might provide a motive,

it does not support an inference of willful infringement. This

court declines to find that motive to profit, standing alone,

provides a reasonable inference of willful infringement. Second,

Mr. York’s testimony that OptoLum’s invention is the only

technology which enabled the success of the accused product,

while evidence of infringement, is not sufficient to create an

issue of fact for willful infringement. Although circumstantial

evidence can, and often is, necessary to establish knowledge and

intent, those circumstances must be sufficient to establish

Cree’s state of mind as to a willful or deliberate infringement

of either the ‘303 or the ‘028 Patents at the time of the

challenged conduct. See Halo Elecs., 136 S. Ct. at 1933

(citations omitted) (“[C]ulpability is generally measured

against the knowledge of the actor at the time of the challenged

conduct.”); see also Bayer Healthcare, 989 F.3d at 988 (holding

that evidence knowledge of the patents-at-issue and evidence the

defendant infringed is sufficient but not necessary to

establishing willful infringement). Taking the evidence in the

light most favorable to Plaintiff, although Plaintiff may have

established Cree knew of the Asserted Patents and that Cree

infringed the Asserted Patents, Plaintiff cannot point to any

evidence that supports a finding of willfulness. Neither Cree

wanting to be first to market nor Cree wanting to build its

brand from the success of the accused products is evidence of

bad-faith behavior. Accordingly, this court will grant

Defendant’s JMOL as to willful infringement.

IV. CONCLUSION

For the foregoing reasons,

IT IS HEREBY ORDERED that Defendant’s Motion for Judgment

as a Matter of Law under Federal Rule of Civil Procedure 50(a)

Regarding Lack of Willfulness, (Doc. 323), is GRANTED.

This the 24th day of November, 2021.

*

Gohan.

United States District Ju

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