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APPLIED INTERACT v. VERMONT TEDDY BEAR COMPANY

September 6, 2005.

APPLIED INTERACT, LLC, Plaintiff,
v.
THE VERMONT TEDDY BEAR COMPANY, INC. Defendant.



The opinion of the court was delivered by: HAROLD BAER, JR., District Judge[fn*] [fn*] Chris Straw, a Fall 2005 intern in my Chambers, and currently a second year law student at New York University School of Law, provided substantial assistance in the research and drafting of this Opinion.

OPINION & ORDER

On November 4, 2004, Plaintiff, Applied Interact, LLC ("AI"), filed the instant action against Defendant, The Vermont Teddy Bear Company, Inc. ("VTB"). The complaint alleges, inter alia, that VTB infringed certain patents currently licensed to AI. Presently before the Court is a motion by VTB for summary judgment of non-infringement pursuant to Rule 56 of the Federal Rules of Civil Procedure. Oral argument was held on August 30, 2005 and this motion is now sub judice. For the reasons set forth below, VTB's motion is GRANTED in part and DENIED in part.

I. BACKGROUND

  A. Factual Overview

  AI is the exclusive licensee of United States Patent Nos. 5,227,874 (issued July 13, 1993) ("the '874 patent"); 5,249,044 (issued Sept. 28, 1993) ("the '044 patent"); 5,508,731 (issued Apr. 16, 1996) ("the '731 patent"); and 5,713,795 (issued Feb. 3, 1998) ("the '795 patent) (the "patents-in-suit") (Am. Compl. ¶¶ 8-11).*fn1 All four patents relate to methods of communication between an "organizer" and audience members in remote locations. The patents contemplate that the organizer will broadcast certain stimuli, such as product advertisements or sweepstakes; that audience members will respond to the stimuli from remote locations and be able to generate product coupons at those remote locations; and that the organizer will evaluate the individual responses. See Abstracts of '874, '044, '731, '795 patents.

  VTB, like everyone else, hosts a web site on the Internet containing information about its products. Through its web site, VTB offers visitors a coupon for a free tour of its factory. See Print-out of Factory Tour Coupon Web Page ("Coupon"), Ex. 1 to 07/01/05 Declaration of Paul T. Qualey, counsel for AI ("Qualey Decl."). VTB's web site allows visitors to search for information about products that VTB sells online. See Print-out of First Product Search Web Page ("Product Search 1"), Ex. 4 to Qualey Decl. VTB also invites its web site visitors to sign up to be "PreFUR'd" members and be entered in its sweepstakes to win a free teddy bear. See Print-out of Membership Invitation Web Page ("Membership Invitation"), Ex. 6 to Qualey Decl. AI contends that when VTB communicates with its customers through these online features, VTB and its customers perform certain actions that infringe the patents-in-suit. See 07/01/05 Plaintiff's Opposition to Defendant's Motion for Summary Judgment of Non-Infringement (Pl. Opp'n) at 1. AI also contends that VTB induces its customers to perform the allegedly infringing acts. See id.

  B. Procedural History

  On February 11, 2005, AI filed an Amended Complaint charging VTB with infringement of the '874 and '044 patents. Am. Compl. ¶¶ 20, 22. AI also charges VTB with willful and deliberate infringement of the '731 and '795 patents, alleging that VTB's infringement of these patents continued after VTB was given written notice of infringement. Am. Compl. ¶¶ 13-14, 17-18. AI requests inter alia, a permanent injunction, reasonable attorney fees, expenses and costs, treble damages for willful infringement of the '731 and '795 patents, and damages in accordance with 35 U.S.C. § 281. (Am. Compl., Prayer for Relief). On June 9, 2005, VTB filed a motion for summary judgment on the grounds that AI lacked standing to institute this lawsuit. On July 28, 2005, this Court denied the motion.

  II. LEGAL STANDARD FOR SUMMARY JUDGMENT

  A court will not grant a motion for summary judgment unless it determines that there is no genuine issue of material fact and the undisputed facts are sufficient to warrant judgment as a matter of law. Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The standard for summary judgment is no different in patent infringement cases than in any other case. See TechSearch, L.L.C. v. Intel Corp., 286 F.3d 1360, 1369 (Fed. Cir. 2002) (same summary judgment standard applied to non-infringement).

  Pursuant to Rule 56(c), I must review the evidence in support of VTB's motion for summary judgment in a light most favorable to the non-movant. Anderson, 477 U.S. at 255. I must also draw all inferences in the non-movant's favor. See Niagara Mohawk Power Corp. v. Jones Chem., Inc., 315 F.3d 171, 175 (2d Cir. 2000). Summary judgment is thus inappropriate "if there is any evidence in the record that could reasonably support a jury's verdict for the non-moving party." Marvel Characters, Inc. v. Simon, 310 F.3d 280, 286 (2d Cir. 2002) (citing Pinto v. Allstate Inc. Co., 221 F.3d 394, 398 (2d Cir. 2000)).

  While the burden to demonstrate that there is no genuine issue of material fact rests solely with the moving party, FDIC v. Giammetti, 34 F.3d 51, 54 (2d Cir. 1994), once the moving party has provided sufficient evidence to support a motion for summary judgment, the opposing party must "set forth specific facts showing that there is a genuine issue for trial" and cannot rest on "mere allegations or denials." Rule 56(e); see Rexnord Holdings, Inc. v. Biderman, 21 F.3d 522, 525-26 (2d Cir. 1994). The "mere existence of a scintilla of evidence" supporting the non-movant's case is insufficient to defeat a motion for summary judgment. Anderson, 477 U.S. at 252. An "opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

  III. THE DISPUTED CLAIMS

  A. The '874 Patent

  The '874 patent is directed to methods for the evaluation of stimuli intended to promote purchases by shoppers. AI contends that Claim 10 of the '874 patent is infringed by VTB. That claim reads:
A method for evaluating the inducement effect of a stimulus on individuals comprising the steps of:
an organizer exposing individuals to a stimulus intended to induce the performance of a desired act by said individuals,
providing said individuals with electronically programmable token dispensers capable, upon the request of individual ones of said individuals, of dispensing a token having value to said requesting individual, said value being available upon the performance of said act and upon surrender of said token,
programming said dispensers by means of electronic instructional signals transmitted from a central location, said programming including value information to be borne by said token, said step of programming occurring subsequent to exposure of individuals to said stimulus, and prior to an individual requesting the dispensing of a token through entry of a command in said dispenser,
dispensing to each of said requesting individuals a token bearing said value information,
performing the desired act by at least some of said individuals having tokens,
said token surrendering individuals surrendering said tokens to said organizer,
said token surrendering individuals receiving said value, and
said organizer measuring the inducement effect of said stimulus on individuals by evaluating the performance of the desired act by said individuals as evidenced by surrendered tokens.
B. The '044 Patent
  The '044 patent is directed to a system for generating product coupons at remote locations. Here AI contends that VTB has infringed Claim 25 of the '044 patent that reads:
A method of recording and displaying information signals comprising steps of:
providing a system at a remote location for recording product information signals conveyed over a telephone line and, for displaying the signals on a television at the remote location;
a person, at the remote location, contacting a central location by means of a telephone and entering a code;
transmitting product information signals from the central location to the remote location over telephone wires in response to entering of the code;
recording the transmitted product information signals at the remote location on the system; and displaying the recorded signals on the television at the remote location. C. The '731 Patent
  The '731 patent is directed to a system and method for wagering and enlisting responses to broadcast programs. AI contends that VTB has infringed Claim 62 of the '731 patent. That claim reads:
 
A method for encouraging participation in surveys or polls comprising the steps of:
transmitting electronic signals eliciting responses to questions from a central facility to members of an audience to be polled;
receiving elicitations at locations of said members;
providing means for entering a response to individual ones of said members;
entering responses by individual ones of said members;
providing means for communicating response data from the locations of responding members to a central data storage facility;
communicating said response data to said central facility;
storing members' response data at said central facility;
providing means at said central facility for identifying the responding members;
entering responding members in a sweepstakes;
conducting ...

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