Honeywell International Inc. v. ICM Controls Corp.

Citations: 45 F. Supp. 3d 969; 2014 U.S. Dist. LEXIS 119466; 2014 WL 4248434Docket: Civil No. 11-569 (JNE/TNL)

Court: District Court, D. Minnesota; August 27, 2014; Federal District Court

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Plaintiff Honeywell International Inc. has filed an amended complaint against Defendant ICM Controls Corp., asserting 19 counts related to patent infringement, copyright infringement, violations of the Lanham Act, and a breach of Minn.Stat. 325D.44. Honeywell alleges that ICM sells 'direct knockoffs' of four specific Honeywell combustion control products: two oil primary controls (R8184 and R7184) and two gas ignition controls (S8610U and S8910U). The complaint identifies ICM products that correspond to each Honeywell product, claiming that ICM's offerings infringe on Honeywell’s trade dress and copyright, as well as asserting patent claims against specific ICM products and thermostats.

The Court is currently addressing three summary judgment motions from ICM and several Daubert motions concerning the admissibility of expert testimony. The rulings include:

1. ICM's motion for summary judgment on the invalidity of three patents, which is granted for U.S. Patent No. 6,478,574 and denied for the others.
2. ICM's motion regarding Honeywell’s false advertising claim, which is granted.
3. ICM's motion on trade dress infringement claims, which is also granted.
4. Honeywell's Daubert motion to exclude testimony from certain witnesses, partially granted and denied based on mootness and other factors.
5. ICM's motions to exclude the testimony of various experts, with some granted and others denied, particularly on mootness grounds or allowing for objections at trial.

Summary judgment is appropriate when the moving party demonstrates that there is no genuine dispute regarding any material fact and is entitled to judgment as a matter of law, as outlined in Fed. R. Civ. P. 56(a). A party asserting that a fact is undisputed must reference specific parts of the record or show that the opposing party cannot produce admissible evidence on that fact (Fed. R. Civ. P. 56(c)(1)(A-B)). The court primarily considers the cited materials but may review other relevant materials in the record (Fed. R. Civ. P. 56(c)(3)). In assessing summary judgment, courts must view disputed facts favorably towards the nonmovant and draw reasonable inferences in their favor, as established in Ricci v. DeStefano and Anderson v. Liberty Lobby.

Expert testimony admissibility is governed by Federal Rule of Evidence 702, which requires that the expert's specialized knowledge assists the trier of fact, is based on sufficient data, utilizes reliable methods, and applies those methods reliably to the case's facts. Factors for evaluating reliability and relevance include testing of the theory, peer review, known error rates, and acceptance in the scientific community (Russell v. Whirlpool Corp.). However, the inquiry is flexible, and no single admissibility requirement exists as long as the expert's opinions appear reliable and relevant (Unrein v. Timesavers, Inc.). Challenges to admissible evidence can be made through cross-examination, contrary evidence, and instructions on the burden of proof (Daubert). The focus of the Daubert inquiry is on the principles and methodology rather than the conclusions drawn. The factual basis for an expert’s opinion affects credibility, not admissibility, with cross-examination serving as the means to challenge it (Bonner v. ISP Techs.).

In this context, ICM has filed a motion for summary judgment seeking to invalidate three of the four patents asserted against it by Honeywell, specifically arguing that certain claims of the '061 patent do not meet the enablement and written description requirements set forth in 35 U.S.C. § 112.

ICM asserts that claims 3, 7, and 8 of the '759 patent are invalid due to inadequate written description. For the '574 patent, ICM argues that claim 1 is invalid for indefiniteness under 35 U.S.C. § 112, second paragraph. Patent law presumes validity, placing the burden of proof on the challenger to establish invalidity with clear and convincing evidence per 35 U.S.C. § 282(a). The first paragraph of § 112 outlines a written description and enablement requirement, while the second paragraph mandates that claims distinctly specify the invention's subject matter. A claim failing to meet the enablement, written description, or definiteness requirements is deemed invalid. Enablement requires that the specification allows someone skilled in the art to practice the claimed invention without undue experimentation. While every variant need not be described, reasonable enablement of claimed ranges is necessary. Written description must demonstrate that the patentee possessed the claimed invention at the time of application. This involves an objective inquiry into the specification's adequacy from the perspective of a skilled artisan. Compliance with these requirements, although generally a factual question, can be resolved via summary judgment if no reasonable jury could find otherwise. The enablement and written description requirements typically correlate but are not always identical and are assessed as of the patent's effective filing date.

The Supreme Court established a standard for the definiteness requirement under 35 U.S.C. § 112, emphasizing that patent claims must provide reasonable certainty about the invention's scope to those skilled in the art, while acknowledging that some uncertainty is acceptable to foster innovation. The patent must clearly inform the public of its claims to delineate what remains available for use. Indefiniteness is evaluated from the perspective of a person skilled in the art at the time of the patent application, and while factual issues may arise, the determination of indefiniteness is ultimately a legal conclusion made by the court.

In the context of ICM's challenge to claims 1-4 and 9 of the '061 patent, which pertains to a "Sensor Condition Indicating System," the focus is on the term "value differentiator" in independent claim 1. This claim describes an apparatus that includes a "value differentiator" receiving an input signal to produce a "range signal," indicating which predetermined value range the input falls into, and a "signaling unit" that converts this range signal into a human-perceptible output. The specification illustrates the invention's application in signaling malfunctions in a furnace or boiler.

ICM argues that the broad scope implied by the specification lacks adequate support, citing a paragraph that suggests multiple implementation methods without detailing each one. This assertion challenges the adequacy of the written description and enablement of the claims, asserting that the specification's broad claims are unsupported.

ICM argues that the patent specification only describes a 'microprocessor' or 'custom circuit' as a 'value differentiator,' while the claims encompass various unnamed mechanisms. Despite the specification's claim of numerous possible implementations, ICM has failed to identify any mechanisms that would fall within the claims’ scope but are not enabled or adequately described. The term 'value differentiator' is broadly defined functionally, yet ICM has not provided sufficient evidence to support its assertion that the full scope of this term lacks enablement or adequate description. 

The enablement inquiry requires evaluating several factors, including the quantity of experimentation necessary, guidance provided, availability of working examples, the nature of the invention, prior art state, the skill level in the field, and the predictability of the art. ICM has not addressed these factors effectively. It seeks to invalidate the patent based solely on broad claims about unspecified embodiments, without citing any precedent where a court found a lack of enablement or written description based on theoretical embodiments alone. Previous cases highlight that such issues arise from disputes regarding specific embodiments or genera, not abstract claims. ICM has not specified any devices or applications qualifying as 'value differentiators' that lack adequate description or enablement. Without this identification and demonstration of failing to meet the requirements of Section 112, ICM cannot succeed on summary judgment. The claims made by ICM appear to be typical assertions found in patent specifications that suggest coverage of unmentioned embodiments.

ICM argues that claims 3, 7, and 8 of the '759 patent, which pertains to the configuration of programmable thermostats, are invalid due to insufficient written description. These claims involve a portable configuring apparatus capable of transferring configuration information between multiple air management systems. ICM asserts that the patent's specification only describes configuring a single thermostat and does not mention the transfer of configuration data, a concept introduced during the prosecution process. Specifically, the original claims did not include any reference to "transfer," which ICM contends indicates a lack of written description support.

However, the court disagrees with ICM's position, noting that while the specification emphasizes single thermostat configuration, it does contain sufficient references suggesting the potential for transferring configuration information between systems. For example, it mentions that configuration information can be uploaded to the PDA from one controller and subsequently used with multiple thermostats or systems. The court concludes that ICM has not demonstrated that the inventors intended to exclude transfers between systems, thereby supporting the validity of the claims in question.

Statements in the specification of Tronzo v. Biomet, Inc. highlight that the conical shape of the invention is distinct from prior art shapes, indicating insufficient written description for claims covering other shapes. Consequently, a reasonable jury could determine that a related specification adequately describes the concept of transfer. ICM has failed to prove on summary judgment that claims 3, 7, and 8 are invalid due to lack of written description.

ICM argues that claim 1 of the '574 patent is indefinite due to an apparent omission of language, suggesting that the claim lacks an essential 'object' before the term 'comprising.' ICM cites the structure of claim 1, which is incomplete as it currently lists 'switch means' and 'timing means' without a clear subject. Different phrases proposed by Honeywell to fill this gap imply varying claim scopes, contributing to the claim's indefiniteness.

Mr. Thomas Gafford, an expert for Honeywell, classifies claim 1 as being in Jepson format, typically indicating an improvement over prior art, and suggests the missing language could be 'the improvement' or 'the invention.' However, Gafford later asserts that a skilled individual would recognize the omission as 'a controller.' ICM argues that the claim's scope lacks reasonable certainty, as the interpretation of 'a controller' impacts whether the preamble is limiting, thus affecting the claim's breadth.

Ultimately, the Court need not resolve whether the preamble is limiting, as the scope will vary depending on the replacement term chosen, reinforcing ICM's position that the claim is invalid due to indefiniteness.

The preamble's wording, particularly the term 'a controller,' suggests differing claims depending on its interpretation. A plain reading indicates that elements following 'comprising,' namely the switch means and timing means, may not necessarily be part of the controller if 'improvement' or 'invention' is used instead. The specification of the '574 patent describes a burner system focusing on an improved oil burner system that prevents safety lockout during operation. It introduces a 'pump priming' mode operable by a technician through a reset button, which allows for extended safety switch timing, thereby avoiding lockout. Although the specification does not explicitly define 'switch means' or 'timing means,' it implies the reset button functions as a switch means without being confined to the controller. Additionally, references to related patents indicate that the reset mechanism may not be restricted to the controller, supporting the conclusion that the switch means is not necessarily part of the controller component of the burner control system. If the claim's missing language were 'the improvement' or 'the invention,' the switch means would at least not be limited to the controller.

The claim's lack of definiteness stems from ambiguous missing language, resulting in uncertain scope and rendering the claim invalid. ICM seeks summary judgment on Honeywell's false advertising claim, alleging ICM falsely advertises its products as "Made in the USA." Honeywell asserts that ICM's products do not meet this designation due to substantial foreign manufacturing components. ICM's experts report that a significant portion of production occurs in Syracuse, NY, with foreign components valued between 10.4% and 23.8%, classified as "commodity" parts. In contrast, Honeywell's expert estimates foreign material costs between 33.6% and 80.2%, with total foreign content varying from 19.4% to 52.9% when including labor and other costs.

Honeywell claims ICM's advertising violates § 43(a) of the Lanham Act, which prohibits false designations of origin that misrepresent the nature or origin of goods in commercial advertising. To succeed, Honeywell must demonstrate a false statement, deception of a substantial audience, materiality of the deception, interstate commerce causation, and potential injury. False advertising claims can be based on literal falsity or misleading implications. The standard for proving literal falsity is strict, requiring an unequivocal message; ambiguity undermines the claim. The Lanham Act's literal falsity doctrine addresses only unambiguously false statements.

A statement deemed literally false does not require extrinsic evidence of consumer deception, as established in Time Warner Cable and Schering-Plough, which emphasize that literal falsity circumvents the need for expensive consumer surveys. Conversely, if a claim is misleading but not literally false, proving that the advertisement conveyed an implied message that deceived a significant portion of consumers becomes essential, often relying on persuasive consumer surveys, as noted in United Industries Corp. The Eighth Circuit has stated that for claims not considered literally false, the burden of proving actual deception lies with the party seeking relief under the Lanham Act, necessitating reliable consumer or market research.

ICM argues that Honeywell cannot demonstrate literal falsity regarding the claim "Made in the USA," asserting that the term is too ambiguous and that Honeywell lacks sufficient survey evidence to show deception. ICM cites dictionary definitions and its activities in Syracuse, NY, to support its position that its statement is not false. While Honeywell contends that the statement is literally false and deserving of summary judgment, the Court agrees with ICM, finding that "Made in the USA" lacks sufficient clarity in this context to establish literal falsity. The Court notes Honeywell's failure to cite any case that unequivocally defines the phrase as unambiguous, referencing only a 1996 case, Master Lock Co. v. Hampton Products International Corp., which applied FTC guidelines without addressing the ambiguity of "Made in the USA."

The FTC guidelines require that "all or virtually all" of a product must be made in the U.S. for claims to be valid. However, the Court clarifies that a Lanham Act plaintiff must prove that advertisements are literally false or misleading to the public, not merely that they violate FTC guidelines. Consequently, the Court refrains from equating the determination of ICM's statements with FTC compliance, concluding that the FTC's own policy indicates that "Made in the USA" is not sufficiently clear to support a literal falsity claim under Honeywell’s Lanham Act assertion.

A product is considered "all or virtually all made in the United States" if its significant parts and processing originate from the U.S., with final assembly or processing occurring domestically. The Federal Trade Commission (FTC) mandates that products must be "substantially transformed" in the U.S. to meet this criterion, as consumer perception heavily relies on where a product is assembled. Factors beyond this minimum threshold include the proportion of U.S. manufacturing costs and the distance of any foreign content from the final product, evaluated on a case-by-case basis without a fixed ratio. 

The guidelines suggest that the appropriateness of a "Made in the USA" claim is context-specific, making definitive interpretations challenging. In this case, the court finds the phrase "Made in the USA" ambiguous, preventing a determination of literal falsity, as final assembly and processing do occur in the U.S. Additionally, other federal regulations provide various definitions of domestic production, indicating that "Made in the USA" lacks a universal meaning. As Honeywell cannot pursue a claim of literal falsity, it must provide consumer evidence to support its alternative theory of deception in advertising, as established by the Eighth Circuit.

Honeywell has not provided reliable consumer or market research to support its claim that ICM’s use of the phrase “Made in the USA” is deceptive. Instead, Honeywell relies on the opinion of Dr. Akshay Rao, a marketing professor, who asserts that contractors believe such a claim suggests that 100% of a product and its components are manufactured in the U.S. Dr. Rao references deposition testimony from Charisse Barber, who indicates that contractors share this belief. However, Dr. Rao has not conducted any actual research with contractors or demonstrated relevant experience, and his conclusions are largely theoretical. Consequently, his and Barber's testimonies do not constitute reliable market research regarding contractors' understanding of the phrase. Honeywell also cites studies from the FTC related to consumer perceptions of “Made in the USA," but these studies are outdated and do not specifically address current contractor perceptions or the consistency of those perceptions with ICM’s claims. The FTC itself noted that consumer interpretation of U.S. origin claims varies and is dependent on the product and its sourcing. As a result, the FTC findings do not provide sufficient market evidence to support Honeywell's Lanham Act claim against ICM.

Honeywell's claim for false designation of origin is dismissed due to insufficient evidence of consumer deception regarding its products. The court referenced Am. Italian Pasta Co. v. New World Pasta Co., emphasizing that failing to establish any element of the prima facie case is detrimental to the claim. Additionally, ICM's motion for summary judgment challenges Honeywell's four counts of trade dress infringement under Section 43(a) of the Lanham Act, which protects a product's trade dress, including packaging and design. Honeywell's claimed trade dress for these products is unregistered, necessitating proof of distinctiveness, nonfunctionality, and likelihood of consumer confusion. ICM argues that Honeywell has not demonstrated the nonfunctionality of its claimed trade dress. Honeywell's description of its trade dress encompasses a combination of specific design elements for each product, yet there is ambiguity in whether it claims protection for individual elements or solely the combination. The court notes significant similarities between the Honeywell and ICM products, particularly highlighting the Honeywell R8184 in relation to its ICM counterpart.

Trade dress protection is limited by the principle that, in many cases, copying goods is permissible unless protected by an intellectual property right such as a patent or copyright. The Supreme Court has warned against the overextension of trade dress, particularly regarding product designs and configurations. Courts emphasize the need for caution in granting protection in these areas, as maintaining the availability of functional containers and product designs for competitors serves societal interests, even if it might lead to some consumer confusion.

Under the Lanham Act, a party seeking trade dress protection must demonstrate that the unregistered trade dress is non-functional, as there is a presumption of functionality. The distinction between functional and non-functional features is nuanced and not clearly defined. The Supreme Court's decision in TrafFix reaffirmed that the traditional rule from Inwood Laboratories applies, which states that a product feature is functional if it is essential to the product's use or affects its cost or quality. The Court clarified that the additional language from Qualitex regarding "non-reputation-related disadvantage" does not alter the functionality inquiry but serves as a consideration in cases of "aesthetic functionality." The test for functionality involves a two-step process, as established in various cases, including Au-Tomotive Gold and Louboutin.

The traditional nonfunctionality inquiry, as set forth in Inwood, is first assessed to determine if any functionality exists. If no functionality is found, a secondary inquiry evaluates whether competitors would face a significant non-reputation-related disadvantage. However, if a design is deemed functional under the Inwood standard, further inquiry into competitive necessity is unnecessary. The Eighth Circuit refers to “arbitrary embellishment” in evaluating trade dress nonfunctionality, indicating that trade dress is nonfunctional if it serves primarily as an identification tool rather than contributing to commercial success. Trade dress protection applies only to arbitrary or ornamental features that signify product source. For Honeywell’s controller products, an examination of claimed trade dress elements reveals they relate solely to functional characteristics of the external components, which serve specific purposes (e.g., protection, indication, information). Honeywell asserts its trade dress includes aspects like color and arrangement of components, which are categorized as shape, color, or configuration. The central question is whether Honeywell has provided adequate evidence to counter the presumption of functionality regarding its claimed trade dress at both inquiry stages. Honeywell has not demonstrated that its claimed trade dress is nonfunctional under the Inwood test, focusing instead on competitive necessity and the notion of alternative designs.

Alternative designs are relevant to the inquiry of functionality, but relying solely on the competitive necessity test is insufficient. Honeywell's approach misapplies the nonfunctionality standard by focusing on the absence of a "significant non-reputation-related disadvantage." Honeywell's witnesses describe its products as having "arbitrary" features, indicating multiple design options exist. Testimony from corporate witnesses John Cueva and Richard Simons confirms that "arbitrary" means the designs could have been different, rather than implying any necessary design choice. Honeywell also claims that ICM's experts agree competitors lack a significant disadvantage from not using Honeywell's trade dress; however, their testimony merely suggests the possibility of alternative designs and indicates that the products' appearance does not drive consumer demand. This supports the view that the products are utilitarian in nature and not distinctive, undermining the argument for nonfunctionality. Honeywell's expert witnesses similarly focus on competitive necessity without adequately addressing use, purpose, cost, and quality factors essential to the nonfunctionality assessment.

Mr. Schumacher's reply expert report identifies a functional feature as one that, if exclusively used, would disadvantage competitors significantly in a non-reputational manner. While he references various legal principles regarding functionality, he fails to address the critical standard of whether the asserted trade dress is essential for the products' purpose or influences their cost or quality. Similarly, Mr. Thomas Gafford's rebuttal report echoes Schumacher's definition but also omits this key inquiry. Gafford's initial report lacks clarity on the legal principles and meanings of "arbitrary" and "nonfunctional" in relation to Honeywell’s product designs. His analysis concludes that the products’ shapes, colors, and configurations are arbitrary and nonfunctional, asserting no technical necessity for ICM’s products to share these characteristics. Gafford's report aligns with Honeywell’s strategy of highlighting alternative designs to support claims of nonfunctionality. He references replacement controllers from other manufacturers and ICM’s alternative designs, suggesting their existence underscores the arbitrary nature of both companies' products. Honeywell argues that the existence of diverse trade dress among competitors indicates its designs' nonfunctionality but ultimately fails to demonstrate that its claimed trade dress is non-essential to product use or does not impact cost or quality. This approach incorrectly treats the competitive necessity test as a comprehensive definition of functionality, a stance deemed inappropriate by the TrafFix case.

Honeywell's assertions regarding the interchangeability and feasibility of competitor designs lack supporting evidence that demonstrates these alternatives do not incur higher costs or quality issues compared to Honeywell’s designs. Although Honeywell references ICM witness testimony estimating the costs of redesigning molds between $12,500 and $20,000, it fails to provide a comparison of the full manufacturing, storage, and shipping costs associated with the redesigned cases versus Honeywell's designs. An expert cited by Honeywell confirmed that switching to a new shape would not be expensive but did not address the overall cost implications of such a change. Additionally, Honeywell did not present evidence indicating that its design choices were made for identification rather than functional utility, which is critical to the nonfunctionality inquiry. Common knowledge supports the idea that many claimed design elements serve functional purposes, such as the use of black and gray for equipment housings, which are common for their ability to blend into backgrounds. The practicality of simple shapes and the constraints imposed by installation requirements further imply that the configurations and shapes of Honeywell's products are functional. By concentrating on the possibility of alternative designs without addressing the fundamental question of functionality, Honeywell has not met the necessary burden of proof. The controllers in question are primarily functional components combined in a manner that serves a specific purpose, which precludes a claim of nonfunctionality for the overall trade dress. Thus, summary judgment against Honeywell is warranted.

Competitors may face a significant non-reputation related disadvantage if Honeywell is granted exclusive rights to basic design elements like colors and shapes. Even assuming Honeywell had sufficient evidence that these elements are non-essential to product function and do not affect cost or quality, it failed to demonstrate that their use does not disadvantage competitors. Granting exclusive rights to basic design components limits other designers' creative options. Unlike unique designs in past cases, such as the distinctive use of colors or shapes in high-profile products, Honeywell’s claimed elements lack significant uniqueness. Although Honeywell acknowledged possible design variations, it did not sufficiently prove that these variations were numerous enough to prevent a competitive disadvantage. The evidence suggests that recognizing Honeywell's trade dress protection could create foreseeable disadvantages for competitors, as some competitor products closely resemble Honeywell's, raising concerns about potential infringement claims. Furthermore, hypothetical alternatives presented by Honeywell's expert were not validated as acceptable for trade dress protection. Accepting Honeywell's claims would imply that almost any conventional product design could qualify for protection, potentially extending to unregistered designs of other competitors as well.

New entrants face a significant burden in avoiding initial combinations that receive legal protection, particularly affecting suppliers of technical equipment essential for their functionality. The "competitive necessity" aspect of the functionality doctrine is relevant here, as established in Valu Eng’g, stressing that competition's impact is central to the functionality assessment. Functional components presented in a generic fashion do not inherently support a claim of nonfunctionality, as noted in the Honeywell case. Honeywell’s controllers, while having an exterior appearance, lack any evidence of a nonfunctional purpose. The copying of products, although traditionally viewed negatively, is generally permissible without patent or copyright protections, as affirmed by the Supreme Court. Nonfunctionality is grounded in the principle that a right to compete through imitation exists, only temporarily restricted by intellectual property laws. Honeywell must demonstrate that its unregistered trade dress is nonfunctional, which requires proving it is merely ornamental or incidental. The court found that Honeywell failed to provide adequate evidence for this claim, making summary judgment appropriate.

In the context of Honeywell's Daubert motion, the exclusion of testimony from three ICM experts is addressed. Mr. Robert Stein's report on false designation of origin is deemed moot following the dismissal of that claim. Dr. Leon Kaplan's survey on HVAC contractor purchasing behavior, commissioned by ICM, is relevant to potential equitable awards under trade dress infringement or false advertising claims. Honeywell argues that Dr. Kaplan's conclusions lack a foundation in established trade dress law principles.

Honeywell contends that Dr. Kaplan's opinions regarding HVAC contractors’ product-purchasing considerations are irrelevant to the trade dress, copyright, and "Made in the USA" false advertising claims, particularly since most of these claims have been dismissed, rendering Honeywell's motion largely moot. As ICM does not intend to present Dr. Kaplan's study to the jury but rather to the Court for assessing equitable damages, Honeywell's objections to his opinions will not be considered at this time. Therefore, Honeywell’s motion related to Dr. Kaplan's testimony is denied without prejudice.

Mr. Adam Vaczek’s proposed testimony pertains to copyright infringement claims. He submitted an expert report in response to Honeywell’s assertion that ICM’s installation manuals and product labels infringe its copyright. Vaczek has over 30 years of HVAC industry experience, including 20 years as a service technician and later as a service manager. His report contains two sections. 

In Section A, Vaczek evaluates the content of Honeywell's product manuals and labels, stating they offer little unique content and instead consist of standard industry information and directives. He analyzes the manuals and labels, concluding their organization and content are typical of other manufacturers, primarily factual, and dictated by the controls’ features.

In Section B, Vaczek compares the manuals and labels of Honeywell and ICM, identifying differences and similarities while explaining the reasons for these distinctions and overlaps.

Mr. Vaczek's report is challenged by Honeywell on three grounds. First, Honeywell argues that Mr. Vaczek's lack of expertise in copyright and his admission of not addressing copyrightability render his report irrelevant. The court, however, interprets this challenge as questioning the relevance of his testimony rather than its admissibility. Second, Honeywell claims that Mr. Vaczek's opinions lack a foundation in the analysis of the originality of Honeywell's registered works. Third, Honeywell asserts that due to ICM's failure to disclose how the manuals were created, Mr. Vaczek should not be permitted to explain their resemblance to Honeywell's materials.

To evaluate these arguments, it is necessary to review copyright law, which requires proving two elements for copyright infringement: ownership of a valid copyright and copying of original elements. Originality means that the work is independently created and possesses some minimal creativity. Copying can be demonstrated through direct evidence or by establishing that the alleged infringer had access to the copyrighted materials and that substantial similarity exists between the works. 

The determination of substantial similarity follows a two-step analysis: the extrinsic test, which focuses on objective similarities in details, and the intrinsic test, which assesses the ordinary person's response to the expression. The level of similarity required may vary based on the factual nature of the work, as facts themselves are not copyrightable, though original expressions of facts are. Thus, factual works may require near verbatim reproduction for infringement to be found, while the degree of creativity in the work influences the extent of similarity needed for a successful claim.

A copyrighted work may contain elements that are not protected, as established in various case law, including Feist Publications and X-IT Products. The doctrines of merger and scenes a faire limit protection; the former denies copyright to expressions of ideas that can only be conveyed in a few ways, while the latter restricts protection for standard elements in particular contexts. Expert testimony can inform the extrinsic test for substantial similarity, focusing on objective criteria like artwork type and materials, but is not suitable for the intrinsic test of similarity of expression, as highlighted in Rottlund. 

Section B of Mr. Vaczek’s report, which attempts an analytical dissection to rebut similarity of expression, runs afoul of these principles and will be excluded due to its impermissible content. In contrast, Section A of the report is admissible and relevant, addressing the strength and scope of protected elements in Honeywell’s materials and the merger and scenes a faire defenses raised by ICM29. It identifies necessary information for manuals and labels based on product features and industry standards, while acknowledging that factual content, despite being copyrightable, may influence the strength of protection. Mr. Vaczek’s specialized knowledge regarding the functional requirements of the content is deemed beneficial for the jury. Section A is compliant with Daubert standards, although it includes statements suggesting limited expressions and basic language usage.

Mr. Vaezek lacks experience in drafting manuals or labels, and while he has reviewed such materials, he does not possess special expertise in linguistics. He can discuss the necessity and typicality of content but cannot opine on the limitations of expression or the simplicity of specific expressions. The Court concurs with Honeywell that Mr. Vaezek's use of "unique" and the emphasis on factual material might mislead the jury regarding legal standards. However, this risk can be mitigated with proper jury instructions instead of excluding his testimony entirely. 

ICM filed four Daubert motions, the first concerning Dr. Akshay Rao's testimony related to false designation of origin and trade dress claims. Since the relevant claims were dismissed, ICM's motion to exclude his testimony is denied. 

The second motion concerns Professor Justin Hughes, who provided an expert report evaluating Mr. Vaezek’s findings in light of legal standards regarding copyright. Hughes, a law professor with extensive intellectual property experience, confirms the copyrightability of Honeywell's manuals and labels, discussing the presumption of copyrightability for registered works and outlining legal definitions of protectable works. He argues that factors mentioned in Mr. Vaezek's report do not negate copyrightability, including the irrelevance of facts and data, concepts, uniqueness, and common expressions.

Section V addresses the “merger” doctrine in copyright law, arguing that the contents of Mr. Vaczek’s report do not lead to a merger determination. Section VI contends that Mr. Vaczek’s report does not support a fair use defense. ICM objects to Professor Hughes’ proposed testimony, asserting it improperly advises the jury on copyright law, which is the court's responsibility. Established procedural rules dictate that the jury determines facts based on evidence, while the court provides legal instructions. Although expert testimony on ultimate issues is permissible, it should not encroach upon the jury's domain when the jury can address the matter independently. Honeywell defends Professor Hughes, claiming his report reflects his understanding of the law without instructing the jury. However, his analysis is deeply intertwined with his interpretation of copyright law and critiques Mr. Vaczek’s relevance, which would overstep his role as an expert. Professor Hughes lacks the necessary HVAC technical expertise to challenge Mr. Vaczek’s opinions and does not propose to testify on topics beyond the legal issues at hand. Consequently, excluding his testimony is justified, as it does not meet the qualifications and helpfulness requirements of Federal Rule of Evidence 702.

Mr. Carl Degen provided an expert report on reasonable royalties that Honeywell claims it is entitled to for ICM's alleged patent infringement. ICM seeks to exclude Degen's opinions, arguing they do not meet Daubert standards and violate the "entire market value rule." Under 35 U.S.C. § 284, a patentee is entitled to at least a reasonable royalty upon proving infringement. The reasonable royalty is calculated by multiplying a royalty base, reflecting the revenue pool impacted by the infringement, by a royalty rate, which compensates for the infringement.

Typically, royalties are based on the "smallest salable patent-practicing unit" to avoid overcompensating for non-infringing components of a product. The entire market value rule allows for using an entire product's revenues if the patentee can prove that the patented feature drives the demand for the whole product. Honeywell argues that the accused thermostat and control products are the smallest salable patent-practicing units, and it has sufficiently tied Degen's analysis to the facts of the case.

While ICM contests this characterization, it has not identified a smaller component within the accused products that practices the invention, nor has it demonstrated that using the entire product value is inappropriate. The Court concludes Honeywell's evidence is adequate, and thus, Degen's analysis does not violate the entire market value rule.

The case distinguishes itself from previous instances where the entire market value rule was violated due to the lack of a clear severable component. Relevant case law, including LaserDynamics and Lucent Technologies, illustrates that components like an optical drive or a date-picker tool cannot constitute the royalty base when they are part of larger products. Mr. Degen's assessment of the accused products as the smallest salable patent-practicing unit is challenged by ICM, which argues that further apportionment is necessary due to the products' multiple features. ICM cites district court rulings suggesting that even if the smallest salable unit is identified, distinguishing between infringing and non-infringing features is crucial. Cases such as Rembrandt and Dynetix highlight the importance of ensuring that the royalty base accurately reflects the infringing component's value relative to the overall product. The Federal Circuit supports the principle that royalties should be based on the smallest salable patent-practicing unit but emphasizes that a reasonableness check is required to determine if further apportionment is necessary. This ensures an adequate relationship between the smallest salable infringing unit and the claimed invention.

ICM contends that Mr. Degen’s computations could lead to overcompensation for Honeywell regarding any proven infringement but retains the right to challenge this at trial. The Court finds Mr. Degen's analysis admissible, rejecting claims of an entire market rule violation, as no smaller infringing unit was identified. While expert testimony sometimes requires further apportionment of the royalty base, this case does not warrant exclusion based on that criterion. 

ICM's motion targets specific paragraphs from the expert reports of Messrs. Schumacher, Degen, and Gafford, primarily arguing that some testimony fails to meet Rule 702's helpfulness standard by merely summarizing evidence or offering conclusive statements. The motion regarding Mr. Schumacher’s testimony is rendered moot and will be denied. 

ICM seeks to exclude sections 5-24 of Mr. Degen's damages report, which provide background information on Honeywell and its products, asserting that this amounts to inadmissible evidence disguised as expert testimony. The Court finds that this background context merely supports Mr. Degen's damages opinion and aligns with Federal Rule of Evidence 703, which allows experts to base opinions on facts or data they are aware of or have observed. Any inadmissible evidence introduced through Mr. Degen can be objected to by ICM during the trial, and the Court will make rulings based on applicable evidentiary standards. 

Mr. Gafford, a technical expert for Honeywell, faces objections from ICM regarding select paragraphs from his extensive reports, concerning his testimony on patent infringement and trade dress and copyright claims.

ICM argues that portions of Mr. Gafford’s reports improperly summarize factual evidence, similar to objections regarding Mr. Degen’s testimony, allowing ICM to object at trial if Mr. Gafford introduces inadmissible fact testimony. ICM also contests testimony about the "copying" of its manuals and labels, claiming it encroaches on jury decisions. The contested sections in Mr. Gafford's rebuttal report respond to excluded content from Mr. Vaczek's report, suggesting Mr. Gafford will no longer address that material. 

ICM's motions concerning summary judgment and Daubert challenges yield several outcomes: ICM's motion for summary judgment is granted for U.S. Patent No. 6,478,574 but denied for the others; ICM's motions regarding Honeywell's false advertising and trade dress infringement claims are granted. Honeywell's Daubert motion is partially denied and granted regarding various experts, with specific exclusions for Mr. Hughes. ICM's motions to exclude multiple testimonies are also addressed, with some granted and others denied without prejudice, allowing for future objections at trial. 

Honeywell must file a brief addressing Count XVTI within three weeks, followed by ICM's response in two weeks. The order clarifies that while Federal Circuit law applies to Honeywell's patent claims, the admissibility of expert testimony is governed by regional circuit law. It also notes that the relevant patent provisions apply as they existed before amendments under the Leahy-Smith America Invents Act, without determining if preambles limit claims.

A preamble in a patent claim is considered limiting if it describes essential structure or steps, or if it is necessary to give meaning to the claim, as clarified by the Federal Circuit. Conversely, a preamble is not limiting when the claim body itself defines a complete invention and the preamble merely states the intended use. In the case of the '574 patent, the body of claim 1 lacks significance without its preamble, and it is questionable whether adding "a controller" alters its meaning. The claim body references elements stated in the preamble, indicating that the preamble may be limiting. 

The '574 patent refers to "primary controller" and "controller" interchangeably, citing Honeywell’s R8184 product as an example. The specification depicts the controller as a distinct component within the system, separate from other elements like the "flame detector." Honeywell has not claimed that the term "controller" lacks physical structure. 

Regarding "timing means," a similar analysis is unnecessary due to the existence of multiple reasonable interpretations for the missing language, which complicates correction. ICM’s motion, directed at Count XVIII, mentions electronic components such as capacitors and transistors. The Eighth Circuit has noted ambiguity in whether literal falsity is a factual or legal issue, observing that while consumer confusion is fact-intensive, the clarity of a contract or statute typically falls under legal interpretation. The literal falsity determination involves assessing whether an advertisement conveys an unambiguous statement of fact and if that statement is false. The Sixth Circuit has acknowledged that while the ultimate decision on literal falsity may involve factual disputes, the question of a statement’s ambiguity can be resolved as a matter of law.

An ambiguous statement that is deemed false under reasonable interpretation is not addressed in this case. The Federal Trade Commission Act empowers the FTC to prevent unfair competition and deceptive practices in commerce, allowing it to issue cease and desist orders and enabling the Attorney General to seek civil penalties for violations. District courts can grant injunctions and equitable relief to enforce FTC orders. The FTC regulates "U.S. origin claims" under its authority, and Section 1605(a) of the ARRA permits the use of federal funds for public projects only if all materials are produced in the U.S. The amended complaint cites “Made in the USA” for a Lanham Act claim, with Honeywell's marketing materials showing variations like “100% American Made.” Honeywell fails to differentiate between these phrases and does not demonstrate willfulness or bad faith as referenced in United Industries. ICM filed a Daubert motion to exclude Dr. Rao's testimony; however, even if admitted, Honeywell's evidence does not meet the required standard. The complaint includes patent and copyright claims related to products also subject to trade dress infringement. The Supreme Court's TrafFix case discusses the aesthetic functionality of color as a trademark, referencing Qualitex's trade dress protection for a green-gold color, which was upheld despite concerns about color depletion among competitors. The Court ruled that the trademark doctrine of functionality would mitigate this risk, thus confirming protection for the color in question.

The Eighth Circuit found that alternative designs for a "quick-change drill chuck" could support a nonfunctionality determination, warranting jury consideration. The court primarily focused on the district court's handling of the "likelihood of confusion" in the trade dress claim, with nonfunctionality briefly mentioned. Importantly, the case involving Insty*Bit predates the Supreme Court's TrafFix decision. Subsequent appellate decisions consistently indicate that a combination of functional components with ordinary colors and shapes does not satisfy nonfunctionality standards, as seen in cases like Groeneveld, Secalt, and Eppendorf, which overturned jury findings on nonfunctionality based on presented evidence. ICM was not required to provide evidence of functionality, as established in Celotex Corp. v. Catrett, which confirms summary judgment can be granted when a party fails to show sufficient proof of an essential element. Honeywell did not provide evidence regarding whether its designs were cost-effective or costly, with hypothetical designs suggesting that changing shapes could potentially increase costs. Although the Second Circuit in Louboutin did not address functionality, it left the door open for non-functionality. Honeywell's witnesses described the product designs as “arbitrary,” but this usage does not align with the legal definition associated with the functionality doctrine, which relates to designs adopted primarily for identification and individuality, as noted in Gateway, Inc.

Arbitrariness within trade dress, as established in cases like Qualitex, Louboutin, and Ferrari, indicates that design elements should be intended to distinguish products rather than serve utilitarian functions. For instance, if Honeywell secures trade dress protection for the design of its R8184 unit, competitors would face limitations on product design, potentially disadvantaging them. Honeywell's amended complaint includes Counts XIII-XVI for trade dress infringement under 15 U.S.C. § 1125(a)(1)(A) and Count XVII for false advertising under § 1125(a)(1)(B), claiming ICM falsely implies an affiliation with Honeywell. The Court questions the legal basis for asserting a trade dress infringement claim as false advertising and requests Honeywell to provide legal authority supporting Count XVII within three weeks. ICM can respond within two weeks after Honeywell's submission. Additionally, discussions surrounding Mr. Vaczek’s testimony and its relevance to the extrinsic test are noted, with Honeywell observing his inability to identify formal industry standards, which could affect the case. The complexity and pricing of the accused thermostats are also highlighted, with ICM arguing for a basic model price for calculating royalties, while Honeywell defends its approach, suggesting this issue might be left for jury determination. Honeywell references other district court cases that support its stance on not requiring further apportionment in royalty calculations.

The excerpt outlines judicial interpretations regarding the determination of royalty bases in patent infringement cases. The entire market value rule is deemed inapplicable when the smallest salable patent-practicing unit is used as the basis for calculating royalties. In the case of Summit 6 LLC v. Research in Motion Corp., the court found that using the entire Samsung device as the royalty base was appropriate, as it was the only unit capable of practicing the patent. Conversely, in Broadcom Corp. v. Emulex Corp., the jury's determination that "chips" were the smallest saleable units was upheld, despite evidence of individual "SerDes cores" being sold by other merchants. The Cornell opinion referenced highlights that a close relationship to the claimed invention does not preclude the use of the smallest salable unit as the royalty base, even if it includes additional non-infringing components. It emphasized that a logical alternative for the royalty base would have been the processor itself, as the claimed invention was a minor part of the instruction reorder buffer. The document also notes that ICM’s Daubert motion does not challenge the royalty rates used by Mr. Degen, and the court finds insufficient context to rule on ICM's challenge to a specific paragraph of the reply report.