3M Innovative Properties, Co. and 3M Company, Plaintiffs, v. Barton Nelson, Inc., Defendants.

Civil File No. 02-3591(PAM/RLE).United States District Court, D. Minnesota.
August 8, 2004

MEMORANDUM AND ORDER
PAUL MAGNUSON, Senior District Judge

This matter is before the Court on Barton Nelson’s Emergency Motion for Continuance and on various Motions in Limine. For the reasons that follow, the Court grants the Motion for Continuance and grants in part and denies in part the Motions in Limine.

A. Barton Nelson’s Motion for Continuance

Trial in this case is scheduled to immediately follow a criminal trial that is scheduled to start on August 9, 2004. Dwight Nelson, president of Defendant Barton Nelson, Inc., had open heart coronary bypass surgery on July 7, 2004. According to Barton Nelson, Mr. Nelson’s participation in the trial is crucial to its defense. Mr. Nelson has only been deposed by both parties as a 30(b)(6) witness, and not in his individual capacity. Dr. Clay Burnett, Mr. Nelson’s cardiovascular surgeon, has advised that the stress of trial is not conducive to Mr. Nelson’s rehabilitation. (Eldridge Decl. Ex. A, B.) 3M does not object to this continuance, and in fact has previously requested that the Court remove the trial from its August calendar. (Id. Ex. D.) Thus, the Court reluctantly grants the Motion for Continuance. The Court nonetheless rules on the various Motions to Exclude.

Page 2

A. 3M’s Motion to Exclude Barton Nelson’s Invalidity Argument

3M seeks to exclude Barton Nelson’s argument that Patent 4,907,825 (“‘825 patent”) is invalid as obvious. 3M contends that this argument was not properly asserted by Barton Nelson prior to the close of discovery. Barton Nelson’s Answer to 3M’s Complaint asserted that the ‘825 patent was invalid for both anticipation and obviousness. (See Ans. ¶¶ 27-28.) In October, 3M’s interrogatories then requested:

Identify each claim of the ‘825 patent that Barton Nelson alleges is “invalid” as alleged in Barton Nelson’s Affirmative Defenses, and explain in detail for each such claim all bases for such allegation, including but not limited to identifying each and every prior art reference that Barton Nelson alleges invalidates the claim and describing on an element-by-element basis how each such reference anticipates and/or renders the claim obvious, and identifying all persons with knowledge that refutes or supports each such allegation.

(Liro Decl. Ex. F.) Barton Nelson initially responded:

At least claims 1-5 are invalid because these claims are either anticipated or obvious in light of prior art. For example, the edit tac Sticklers product of Barton Nelson, Inc. was one such product in public use or on sale in this country more than one year prior to the application date of the ‘825 patent. The maxim of “that which infringes if later anticipates if earlier” applies in this situation. That is to say that if any Barton Nelson product is found to infringe the ‘825 patent, the ‘825 patent is invalid for anticipation by at least the edit tac Sticklers product.

(Id.) This response also included an element by element table comparing the edit tac product and the ‘825 patent. (Id.) In the spring of 2004, Barton Nelson filed a motion for summary judgment, asserting that the ‘825 patent was anticipated and therefore invalid. The Court denied Barton Nelson’s motion because Barton Nelson’s edit tac product failed to embody every limitation of claim 1 of the ‘825 patent.

Page 3

On May 18, 2004, after the close of discovery and after the dispositive motion deadline, Barton Nelson supplemented its response to Interrogatory No. 5:

At least claims 1-5 are invalid because these claims are either anticipated or obvious in light of prior art. For example, the edit tac Sticklers product of Baron Nelson, Inc. was one of such product in public use or on sale in this country more than one year prior to the application date of the ‘825 patent, including samples being displayed in a sales catalog widely distributed by Defendant at a national trade show in January or February, 1985. For example, it would have been obvious to one of ordinary skill in the art at the time of the filing of the ‘825 patent application to provide that one end portion be visually distinctive in view of the promotion and provision of visually distinctive indicia on one end of the edit tac sheets as displayed on one page of the above-mentioned 1985 catalog. Additionally, it would have been obvious to one of ordinary skill in the art at the time of the filing of the ‘825 patent application to use a flexible synthetic resin film in lieu of the parchment sheet material of the edit tac product. Both have essentially the same characteristics. Both the parchment and the synthetic resin are sheets that can be adhered to and readily removed from substrates such as written documents without damage to the substrate. Both can have an end portion coated with a repositional adhesive to provide secure engagement with the substrate until intentionally removed, can withstand normal handling without damage, and will not obscure the part of the substrate to which they are attached. The maxim of “that which infringes if later anticipates if earlier” applies in this situation, and that anticipation is the epitome of obviousness. That is to say that if any Barton Nelson product is found to infringe the ‘825 patent, the ‘825 patent is invalid for anticipation and obviousness by at least the edit tac Sticklers product.

(Liro Decl. Ex. E.) 3M contends that the supplemental interrogatory contains a new and untimely argument for patent invalidity premised on obviousness and that Barton Nelson should be precluded from presenting this argument at trial.

Barton Nelson maintains that its Answer and initial response to Interrogatory No. 5 referenced its obviousness argument, making 3M aware that Barton Nelson’s affirmative defenses included both anticipation and obviousness. Barton Nelson further contends that both

Page 4

its anticipation and obviousness argument were premised on the existence of Barton Nelon’s edit tac products. Thus, Barton Nelson’s affirmative defense asserted that the ‘825 patent was invalid based on prior art.

Barton Nelson’s initial interrogatory response may have asserted its obviousness contention, but the facts in the interrogatory response clearly supported its affirmative defense based on anticipation. Barton Nelson contends that it supplemented its interrogatory response with additional facts only after it discovered 3M’s argument that polymeric material excluded paper. Under Fed.R.Civ.P. 26(e), a party is required to supplement its interrogatory responses when “newly discovered facts render a prior answer either incorrect or incomplete.”Havenfield Corp. v. HR Block, Inc., 509 F.2d 1263, 1271-72
(8th Cir. 1975). “It is the new facts that the rule seeks to bring out in the open, not new contentions which may be based upon allegedly new facts.” Id. at 1272. Although the Court agrees that Barton Nelson’s initial interrogatory response is vague, Barton Nelson is not asserting a new contention, but rather providing additional facts to support a previously asserted contention.

The Court, however, takes issue with Barton Nelson’s justification for its untimely supplemental response. Barton Nelson’s supplemental response came after both the close of discovery and the deadline for dispositive motions. Barton Nelson provides no legal authority for the novel proposition that an untimely supplemental response is justified by a party’s failure to properly anticipate its opponent’s theory of the case. Moreover, Barton Nelson’s assertion that it was unaware of 3M’s position on polymeric material until March 29, 2004,

Page 5

is unavailing. 3M filed its own motion for summary judgment in early February 2004 against Barton Nelson for infringement of the ‘825 patent, which included 3M’s argument on this point. Barton Nelson provides absolutely no reason why its supplemental interrogatory response came nearly three months later. Under Rule 26, any amendments must be made seasonably and this three month delay is arguably not seasonable. See id. (unseasonable amendment when party waited two and one-half months from time it received new information and then another five weeks after close of discovery before filing).

Even so, the record demonstrates that 3M had notice of Barton Nelson’s obviousness defense. 3M relies on Transclean Corp. v.Bridgewood Svcs., Inc., 77 F. Supp. 2d 1045 (D. Minn. 1999) (Erickson, Mag. J.). In Transclean, the court excluded the defendant’s obviousness argument because the defendant entirely failed to mention its obviousness defense in any interrogatory response or expert report. 77 F. Supp. 2d at 1060-61. In this case, although Barton Nelson should have supplemented its interrogatory response earlier, its affirmative defense based on obviousness was disclosed to 3M both in Barton Nelson’s Answer and in its initial interrogatory response. This is sufficient to put 3M on notice.

Moreover, in light of the continuance, any prejudice that 3M claims can be remedied. 3M asserts that Barton Nelson lacks sufficient evidentiary support for its obviousness defense, and maintains that it would have brought a dispositive motion against Barton Nelson had it been properly apprized of Barton Nelson’s obviousness argument. Because the Court continues the trial, the Court likewise re-opens the period for dispositive motions. A hearing on new dispositive motions, if any, is scheduled for October 14, 2004, at 2 p.m. Briefing on these

Page 6

motions shall be in accord with the Local Rules. Thus, the Court denies 3M’s Motion to Exclude on this point.

B. Various Motions to Exclude Evidence and Testimony

Both 3M and Barton Nelson seek to exclude evidence and testimony of various witnesses. Barton Nelson seeks to exclude: (1) opinion testimony by Dr. Jeff Payne and Dr. Mark Cavaleri for lack of foundation; (2) the expert rebuttal reports of Dr. Gregory Anderson and Dr. Payne; (3) the September 15, 2003, declarations of Dr. Payne and Dr. Cavaleri and the February 19, 2004, declaration of Dr. Payne; and (4) evidence from individuals who were not included in 3M’s 26(a) disclosures. 3M seeks to exclude the March 26, 2004, declaration of Barton Nelson witness Dr. Vladimir Dusevich.

The scheduling order in this case required that expert disclosures be made on or before September 5, 2003. On September 12, 2003, the Court denied the parties’ stipulation to extend the time for expert disclosures. On September 15, 2003, 3M disclosed photomicrographic evidence of the adhesive on Barton Nelson’s products. This evidence was attached to the declarations of Dr. Payne and Dr. Cavaleri, both of whom were disclosed as fact witnesses in 3M’s Rule 26(a)(1)(a) disclosures. Despite the fact that neither party submitted expert reports on or before September 5, 2003, 3M submitted “rebuttal” expert reports of Dr. Payne and Dr. Anderson on October 17, 2003. On February 19, 2004, in the context of summary judgment briefing, 3M submitted the second declaration of Dr. Payne. On March 26, 2004, Barton Nelson submitted the declaration of Dr. Vladimir Dusevich.

1. Dr. Payne and Dr. Cavaleri

Page 7

Barton Nelson contends that certain evidence in the September 15, 2003, declarations of Dr. Payne and Dr. Cavaleri should be stricken and that any testimony by either witness on those points should be excluded. Barton Nelson takes issue with the photomicrographs taken by 3M of the adhesive on Barton Nelson’s products. Specifically, Barton Nelson contends that Dr. Payne and Dr. Cavaleri cannot properly authenticate the particular Barton Nelson product of which they took photomicrographs. Federal Rule of Evidence 901 only requires that 3M demonstrate a “foundation from which the fact-finder could legitimately infer that the evidence is what the proponent claims it to be.” TranscleanCorp. v. Bridgewood Svcs., Inc., 101 F. Supp. 2d 788, 799
(D. Minn. 2000) (Erickson, Mag. J.) (quotations omitted). 3M has made this prima facie showing, and any doubts raised by Barton Nelson go to the weight, not the admissibility, of the evidence. Seeid. Barton Nelson’s Motion on this point is denied.

2. The Timeliness of Dr. Payne and Dr. Cavaleri’s Declarationsdated September 15, 2003

As noted above, all expert disclosures were due on or before September 5, 2003. The scheduling order further closed discovery on December 1, 2003. On September 15, 2003, 3M submitted the declarations of Dr. Payne and Dr. Cavaleri. 3M contends that none of the declarations present any expert opinion evidence. 3M thus maintains that the September 15, 2003, declarations are timely because they were disclosed prior to the completion of discovery.

At issue in these declarations is the photomicrographic evidence of the adhesive on Barton Nelson’s products. Dr. Payne used scanning electron microscopy (“SEM”) technology

Page 8

to analyze the “topography, composition and other properties” of the adhesive on Barton Nelson’s products. (See Payne Decl. Sept. 15, 2003 ¶ 3.) Dr. Payne’s declaration explained this process and set forth his opinion as to the coverage of the adhesive on Barton Nelson’s products. (See id. ¶¶ 8-16.) Dr. Cavaleri then conducted his own analysis, reviewed Dr. Payne’s report, and likewise opined as to the coverage of the adhesive on Barton Nelson’s products. (See Cavaleri Decl. Sept. 15, 2003 ¶¶ 9-13.) Both declarations include extensive individual qualifying information.

There is no doubt that Dr. Payne and Dr. Cavaleri are qualified to testify as experts. However, the “mere fact that the witness, by virtue of his education, training or experience, is capable of being qualified as an expert, does not serve as a valid objection to his expression of lay opinion testimony.” Hartzell Mfg., Inc.v. American Chemical Tech. Inc., 899 F. Supp. 405, 408 (D. Minn. 1995) (Erickson, Mag. J.). Although the SEMs technology involved is undoubtedly scientific, this scientific process is not the subject of the purported testimony. Rather, 3M seeks to introduce factual evidence regarding the topography of the adhesive. This evidence merely articulates the personal perceptions of the witnesses and is factual in nature. The September 15, 2003, declarations are therefore not untimely. However, should the testimony of these witnesses stray into expert opinion, Barton Nelson may make an objection at that time.

3. Dr. Payne and Dr. Anderson’s Expert Rebuttal Reports

On October 17, 2004, 3M submitted “Rebuttal Expert Reports” of Dr. Payne and Dr. Anderson. However, as noted above, neither party made expert disclosures by September 5,

Page 9

2003, as required by the scheduling order. Therefore, absent any initial expert report to rebut, these reports must be excluded. Barton Nelson’s Motion is granted on this point.

4. Dr. Payne’s February 19, 2004 Declaration and Dr.Dusevich’s March 29, 2004 Declaration

Barton Nelson further seeks to exclude the February 19, 2004, declaration of Dr. Payne as untimely. This declaration is premised on Dr. Payne’s September 15, 2003, declaration. According to Barton Nelson, the March 29, 2004, declaration of Dr. Vladimir Dusevich was submitted to rebut this February 19, 2004, declaration. 3M has offered to exclude the February 19, 2004, declaration of Dr. Payne if Barton Nelson agrees to exclude the March 29, 2004, declaration of Vladimir Dusevich.

Under the scheduling order, discovery ended on December 1, 2003. Dr. Payne’s February 19, 2004, declaration is similar to the September 15, 2003, declaration, but contains more recent photomicrographs of Barton Nelson products. The photomicrographic process used in February by Dr. Payne is the same as the process he used in September. Dr. Dusevich’s declaration questions the accuracy of 3M’s photomicrographs and the topography of the adhesive that it purportedly represents. Although Dr. Dusevich’s declaration was submitted in response to Dr. Payne’s February 19, 2004, declaration, it undoubtedly rebuts Dr. Payne’s September 15, 2003, declaration. The Court acknowledges that both declarations are untimely under the scheduling order. However, the Court declines to exclude the declarations or the testimony of either witness.

The Court must examine four factors when evaluating whether to exclude untimely

Page 10

evidence: (1) the importance of the excluded material; (2) the explanation of the party for its failure to comply with the required disclosure; (3) the potential prejudice that would arise from allowing the material to be used at trial; and (4) the availability of a continuance to cure such prejudice. SeeTransclean Corp., 77 F. Supp. 2d at 1064. In this case, the Court finds that both the testimony of both Dr. Payne and Dr. Dusevich are clearly important. The remaining issue for trial involves whether Barton Nelson’s products conform with the terms of the Covenant Not to Sue. This issue requires a factual assessment of whether the adhesive on Barton Nelson’s products is applied in the form of small spaced dots or islands. The declarations of Dr. Payne and Dr. Dusevich provide evidence that pertain to this ultimate issue. Both parties will not be prejudiced by the admissibility of this evidence, as both parties seek to prevent exclusion of their respective evidence. The continuance of trial further alleviates prejudice to either party. Moreover, the parties’ failure to previously raise these objections and their insistence to bombard the Court with such disputes on the eve of trial further warrant their admissibility. Thus, both parties’ Motions are denied on this point.[1]

5. Barton Nelson’s Motion to Exclude Testimony

Page 11

On March 28, 2004, 3M amended its Rule 26(a) disclosures to include four new witnesses with information relating to damages and lost profits suffered by 3M. This disclosure further contained information relating to 3M’s lost profits and reasonable royalty damage claims. Barton Nelson contends that any evidence relating to these amended disclosures should be excluded because they were beyond the December 1, 2003, discovery deadline. The Court notes that Barton Nelson’s initial Rule 26(a) disclosures were served on December 2, 2003.

3M’s initial disclosures provided Barton Nelson with sufficient notice that 3M intended to pursue damages for lost profits and reasonable royalties. (See Otteson Decl. Ex. E at 4.) Barton Nelson’s argument that this theory of damages was first disclosed in the amended disclosure lacks merit. Barton Nelson’s Motion on this point is denied.

Barton Nelson further contends that the amended disclosures, which included four new witnesses, Douglas Blackwell, William Gengler, Debra Leptein-Obermeuller and James Emmerling, and more detailed information on the testimony of Kelly Dahl, a previously disclosed witness, is untimely and any evidence from these individuals must be excluded. Since the onset of this litigation, 3M has maintained that only some of Barton Nelson products infringe its patents. In order to properly calculate damages, 3M relied on Barton Nelson’s production of evidence relating to the sales of these allegedly infringing products. 3M contends that this evidence was not available until just before its amended disclosure, while Barton Nelson asserts that 3M had access to this evidence since before discovery closed on December 1, 2003. Although the Court notes that 3M should have known that these witnesses

Page 12

likely had relevant information relating to damages, 3M’s amended disclosures were in direct response to the untimely disclosure of Barton Nelson’s sales information. Barton Nelson has not deposed these witnesses, but has known since March 28, 2004, that these witnesses possessed relevant information. Barton Nelson’s attempt to claim prejudice on the eve of trial when it could have raised its objections earlier is unconvincing. The parties must work together to ensure that Barton Nelson is apprized of the relevant testimony that these four witnesses may in fact provide. Barton Nelson’s Motion on this point is also denied.

Finally, Barton Nelson contends that any new evidence that 3M witness Kelly Dahl will provide in light of the amended disclosure must be excluded. The amended disclosure indicated that Dahl would provide evidence relating to “lost sales and profits,” compared to the initial disclosure that indicated she would provide evidence relating to “sales.” Again, the Court is unpersuaded that this distinction compels the exclusion of such evidence.

C. 3M’s Motion to Exclude Evidence Irrelevant to the CovenantNot to Sue

The remaining issue for trial is whether Barton Nelson’s products conform with the Covenant Not to Sue (“Covenant”) between the parties. 3M primarily seeks to exclude evidence pertaining to the interpretation of the Covenant. 3M maintains that the Court interpreted the Covenant and did not rule that it was ambiguous. However, as Barton Nelson points out, the Court’s December 2003 Order specifically stated that its interpretation of the Covenant was “for purposes of this Motion.” On a motion for summary judgment, the court views all evidence in favor of the non-moving party. The Court’s interpretation of the Covenant conformed with this standard, and for purposes of Barton Nelson’s summary judgment motion,

Page 13

the Court followed 3M’s proposed interpretation of the Covenant. However, the Court’s ruling did not conclusively interpret the Covenant, but rather determined that a genuine issue of material fact remained on whether Barton Nelson’s actions are within the scope of the Covenant. Inherent to this issue is an interpretation of the scope of the Covenant. The Court rejects 3M’s argument on this point, and Barton Nelson is entitled to present extrinsic evidence relating to the Covenant. In the event that Barton Nelson presents evidence that strays beyond this finite issue, 3M may object at that time.

D. 3M’s Motion to Exclude Barton Nelson’s Supplemental NoticeUnder 35 U.S.C. § 282

On July 15, 2004, Barton Nelson disclosed to 3M that it intended to rely on 3M magic tape and 3M post-it notes in support of its invalidity defense and counterclaim. 3M maintains that because this notice is beyond the December 1, 2003, discovery deadline, the Court must exclude Barton Nelson’s reference to this prior art. In discovery, 3M specifically requested that Barton Nelson provide it with all prior art references Barton Nelson intended to rely on to support its invalidity claims. In response to this interrogatory, Barton Nelson only referenced it edit tac product as prior art.

However, as Barton Nelson points out, both 3M magic tape and 3M post-it notes were referenced in deposition testimony during discovery. (See Collins Decl. Ex. 1 (Schwandt Dep.).) Although Barton Nelson failed to supplement its interrogatory response under Federal Rule of Civil Procedure 26(e)(2), an identification of both 3M magic tape and post-it notes had been made known to 3M through deposition testimony. However, Barton Nelson never

Page 14

represented that it intended to base its obviousness argument on the prior art of 3M magic tape or post-it notes. Rather, as noted above, Barton Nelson identified only its edit tac products supported its contention that the ‘825 patent was invalid as obvious. Now, nearly seven months after the close of discovery, Barton Nelson seeks to rely on two new pieces of prior art. Barton Nelson provides no rational justification for its untimely disclosure, and any reliance on 35 U.S.C. § 282 as an excuse is unavailing. See ATD Corp. v. Lydall, Inc., 159 F.3d 534, 551
(Fed. Cir. 1998) (“35 U.S.C. § 282 notice and the Federal Rules of Civil Procedure `coexist,'” giving effect to a court’s discovery deadlines). However, in light of the continuance and in light of the fact that the two new pieces of prior art are 3M products, any prejudice claimed by this untimely disclosure can be cured. Therefore, 3M’s Motion on this point is also denied.

CONCLUSION

These Motions in Limine evince a disregard by both parties of the Court’s scheduling order. Accordingly, based on all the files, records, and proceedings herein, IT IS HEREBY ORDERED
that:

1. Barton Nelson’s Emergency Motion for a Continuance (Clerk Doc. No. 152) is GRANTED;

A. Trial is CONTINUED to November 1, 2004; and

B. Dispositive Motions, if any, may be filed in accord with the Local Rules and will be heard on October 14, 2004, at 2 p.m.;

2. 3M’s Motion to Exclude Arguments and Evidence Not Disclosed During

Page 15

Discovery (Clerk Doc. No. 96) is DENIED;

3. 3M’s Motion in Limine to Exclude Evidence and Arguments Irrelevant to the Covenant Not to Sue (Clerk Doc. No. 103) isDENIED;

4. Barton Nelson’s Motion in Limine to Exclude Opinion Testimony by Anderson and Payne based on their Rebuttal Expert Reports and to Strike the Attached Exhibits (Clerk Doc. No. 109) is GRANTED;

5. Barton Nelson’s Motion in Limine to Exclude Testimony in and Exhibits in the Declarations and Reports of Jeffrey J. Payne and Mark E. Cavaleri (Clerk Doc. No. 113) is DENIED;

6. Barton Nelson’s Motion in Limine to Exclude Testimony by Payne and Cavaleri Regarding their Untimely September 15, 2003, Declarations and the Payne Declarations of February 19, 2004 and the Attached Exhibits (Clerk Doc. No. 117) is DENIED;

7. Barton Nelson’s Motion in Limine to Exclude Evidence from Individuals Not Named in 3M’s Original 26(a) Disclosures and to Preclude Further Testimony and Evidence Regarding Damages (Clerk Doc. No. 124) is DENIED; and

8. 3M’s Motion to Exclude Barton Nelson’s Supplemental Notice under 35 U.S.C. § 282 (Clerk Doc. No. 136) is DENIED.

[1] Because neither party submitted expert disclosures in a timely manner, the Court deems this evidence factual in nature. The accuracy of the particular SEMs imaging used by these individiuals goes to the weight of the evidence, not its admissibility, and it is for the trier of fact to evaluate the photomicrographs to determine if Barton Nelson’s products conform with the terms of the Covenant Not to Sue. Because 3M maintains that Dr. Payne and Dr. Anderson are not expert witnesses, the Court likewise holds that Dr. Dusevich is not an expert witness. The substantive nature of the declarations and the proposed testimony of these individuals is identical and any claim to differentiate the nature of this evidence is unavailing. In the event that Dr. Dusevich’s factual testimony becomes expert in nature, 3M may likewise renew its Motion to exclude expert testimony at that time.