DCT

2:23-cv-10322

SK Microworks America Inc v. Far Eastern New Century Corp

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I. Executive Summary and Procedural Information

  • Parties & Counsel:
  • Case Identification: 2:23-cv-10322, C.D. Cal., 05/15/2024
  • Venue Allegations: Venue is alleged to be proper as Defendant Multi-Plastics has a regular and established place of business within the Central District of California, and Defendant Far Eastern New Century Corporation is a foreign corporation subject to venue in any judicial district.
  • Core Dispute: Plaintiff alleges that Defendants’ heat-shrinkable polyester films infringe seven patents related to specific film compositions, heat shrinkage properties, and methods for recycling plastic containers using such films.
  • Technical Context: The technology concerns specialized heat-shrinkable polyester films, primarily used as labels for consumer product containers, where both precise shrinkage performance and compatibility with plastic recycling streams are key market differentiators.
  • Key Procedural History: The complaint alleges that Plaintiff provided Defendants with notice of infringement of certain patents-in-suit as early as September 2019 and February 2021 via letters, phone calls, and meetings at industry conferences. Plaintiff also notes a significant license agreement with Eastman Chemical Company related to its heat-shrinkable film technology.

Case Timeline

Date Event
2010-03-09 Earliest Priority Date for ’865 Patent
2010-10-20 Earliest Priority Date for ’047 Patent
2014-01-21 ’865 Patent Issued
2017-02-21 ’047 Patent Issued
2018-04-30 Earliest Priority Date for ’435, ’897, and '898 Patents
2018-05-21 Earliest Priority Date for ’062 Patent
2019-09-01 Plaintiff allegedly sent first notice letter to Defendants
2019-10-29 Earliest Priority Date for ’691 Patent
2020-01-01 Approximate start of alleged infringing activities
2020-10-13 ’897 Patent Issued
2020-10-13 ’898 Patent Issued
2021-02-01 Plaintiff allegedly sent additional notice letters
2021-05-18 ’435 Patent Issued
2021-10-26 ’691 Patent Issued
2023-05-23 ’062 Patent Issued
2024-05-15 Complaint Filed

II. Technology and Patent(s)-in-Suit Analysis

U.S. Patent No. 9,574,047 - "Heat-Shrinkable Polyester Film"

  • Issued: February 21, 2017

The Invention Explained

  • Problem Addressed: The patent addresses the problem of conventional heat-shrinkable polyester films being unsuitable for labeling high-density polyethylene (HDPE) containers. HDPE containers expand at a lower temperature (starting at 50°C) than conventional films begin to shrink (around 70°C), causing the label to become loose and lose adhesion after cooling (’047 Patent, col. 1:30-41).
  • The Patented Solution: The invention is a heat-shrinkable polyester film with a low glass transition temperature (Tg) and a low shrinkage initiation temperature (≤60°C). This is achieved through a specific chemical composition: a random-copolymerization of a dibasic acid (like terephthalic acid) with three distinct types of diol components (’047 Patent, col. 2:9-21). This allows the film to start shrinking before or concurrently with the container's expansion, ensuring a tight fit after cooling (’047 Patent, col. 2:42-62).
  • Technical Importance: This approach allows for the use of high-performance, visually appealing polyester shrink labels on common and inexpensive HDPE containers, which was previously technically challenging.

Key Claims at a Glance

  • The complaint asserts independent claim 1 (Compl. ¶45).
  • Claim 1 requires:
    • A heat-shrinkable polyester film.
    • Specific thermal properties: a heat shrink-age initiation temperature of 60° C. or lower, a glass transition temperature (Tg) of 77° C. or lower, and a heat shrinkage rate of 2% or more at 60° C.
    • Specific shrinkage rates at higher temperatures: 15% or more at 65° C., 42% or more at 70° C., and 70% or more at 80° C.
    • A specific chemical preparation method: random-copolymerization of one dibasic acid component with three diol components.
    • A specific chemical composition: the dibasic acid is terephthalic acid or dimethyl terephthalate, and the diols are (B1) ethylene glycol, (B2) neopentyl glycol or cyclohexanedimethanol, and (B3) a linear diol with three or more carbon atoms.
  • The complaint does not explicitly reserve the right to assert dependent claims for this patent.

U.S. Patent No. 8,632,865 - "Heat-Shrinkable Polyester Film"

  • Issued: January 21, 2014

The Invention Explained

  • Problem Addressed: The patent identifies that conventional polyester films can have non-uniform shrinkage rates, where the rate of shrinkage changes drastically with small changes in temperature. This leads to problems like wrinkles, distortion, and end-bending, especially in high-temperature processes like sterilization (’865 Patent, col. 1:35-43, 2:30-38).
  • The Patented Solution: The invention is a film engineered to have a specific, controlled "heat-shrinkage change per degree Celsius" across four distinct temperature ranges from 60°C to 100°C. This results in a more linear, predictable shrinkage curve, similar to that of PVC films but with the superior properties of polyester (’865 Patent, col. 2:50-61). Figure 1 of the patent, reproduced in the complaint, graphically illustrates how the inventive examples have a smoother, more gradual shrinkage curve compared to the abrupt curves of conventional films (Compl. p. 14).
  • Technical Importance: This controlled shrinkage behavior provides a high-quality appearance after shrinking and makes the film suitable for a wider range of applications and container shapes without defects.

Key Claims at a Glance

  • The complaint asserts independent claim 1 (Compl. ¶57).
  • Claim 1 requires:
    • A heat-shrinkable polyester film.
    • A specific "heat-shrinkage change per degree Celsius" profile in four temperature ranges: 1.5-3.0 (%/°C) from 60-70°C; 2.5-3.5 from 70-80°C; 1.0-2.0 from 80-90°C; and 0.1-1.0 from 90-100°C.
    • A specific copolyester composition comprising: (i) a dibasic acid with at least 90 mol % terephthalic acid residue, and (ii) a diol component with specific mol percentages of diethylene glycol, neopentyl glycol, and ethylene glycol.
  • The complaint does not explicitly reserve the right to assert dependent claims for this patent.

Multi-Patent Capsules

  • Patent Identification: U.S. Patent No. 11,008,435, “Method for Reproducing Polyester Container and Reproduced Polyester Chip Prepared Therefrom,” issued May 18, 2021.

    • Technology Synopsis: This patent is directed to a plastic container system and a method of recycling it. The invention describes a heat-shrinkable film with specific properties (e.g., high melting point, low "clumping fraction" after thermal treatment) that allow it to be recycled along with the polyester container itself, without needing to be separated first ('435 Patent, col. 2:9-15). This improves the efficiency and yield of the recycling process.
    • Asserted Claims: At least claim 1 is asserted for direct, induced, and contributory infringement (Compl. ¶¶68, 78, 85).
    • Accused Features: The complaint alleges that Defendants' film products, such as Multi-Plastics' 42SH, possess the claimed physical properties and are tested and used in processes that infringe the patent (Compl. ¶¶71, 80).

  • Patent Identification: U.S. Patent No. 11,155,691, “Method for Reproducing Polyester Container and Polyester Film Used in the Method,” issued October 26, 2021.

    • Technology Synopsis: This patent claims a process for regenerating a polyester container by crushing the container and its heat-shrunken film together. The key is a film that exhibits minimal color change (measured as Δa and Δb) after drying at high temperatures ('691 Patent, col. 2:5-9). This prevents the recycled plastic chips from being discolored by the film, which improves the quality of the recycled material without requiring a separate film-removal step ('691 Patent, col. 2:11-14).
    • Asserted Claims: At least claim 1 is asserted for direct, induced, and contributory infringement (Compl. ¶¶93, 103, 110).
    • Accused Features: The complaint alleges that Multi-Plastics' 42SH product is used in infringing recycling processes and that Defendants test the films according to the claimed process (Compl. ¶¶96, 105).

  • Patent Identification: U.S. Patent No. 11,655,062, “Heat Shrinkable Film and Preparation Method Thereof,” issued May 23, 2023.

    • Technology Synopsis: This patent describes a heat-shrinkable film with controlled shrinkage characteristics in the direction perpendicular to the main shrinkage direction. It claims a film that satisfies specific mathematical relationships regarding its shrinkage rates at different temperatures and has a low heat of crystallization ('062 Patent, Abstract). This prevents unwanted shrinkage or deformation in the non-primary direction, improving performance on containers, especially during high-temperature sterilization processes ('062 Patent, col. 3:39-42).
    • Asserted Claims: At least claim 1 is asserted for direct infringement (Compl. ¶118).
    • Accused Features: The complaint alleges that Multi-Plastics' 42SL product infringes by possessing the claimed compositional and physical properties (Compl. ¶121).

  • Patent Identification: U.S. Patent No. 10,800,897, “Heat Shrinkable Film and Method for Reproducing Polyester Container Using Same,” issued October 13, 2020.

    • Technology Synopsis: This patent claims a heat-shrinkable film and a corresponding recycling process. The film is defined by a combination of a high shrinkage rate (≥30% at 80°C) and a high melting point (≥190°C) ('897 Patent, Abstract). These properties are intended to solve environmental problems by improving the recyclability of the polyester container.
    • Asserted Claims: At least claim 1 is asserted for direct, induced, and contributory infringement (Compl. ¶¶130, 140, 147).
    • Accused Features: The complaint alleges that Multi-Plastics' 42SH product infringes the film claims and that Defendants test and use it in infringing processes (Compl. ¶¶133, 142).

  • Patent Identification: U.S. Patent No. 10,800,898, “Method for Reproducing Polyester Container and Reproduced Polyester Chip Prepared Therefrom,” issued October 13, 2020.

    • Technology Synopsis: This patent is directed to a process for regenerating a polyester container by preparing it with a specific heat-shrinkable film, crushing them together, and thermally treating the resulting flakes to produce regenerated chips. The process is defined by the resulting "clumping fraction" being 5% or less, which indicates that the film and container materials do not fuse together improperly during recycling ('898 Patent, Abstract). This avoids a separate step of removing the film from the container ('898 Patent, col. 2:7-9).
    • Asserted Claims: At least claim 1 is asserted for direct, induced, and contributory infringement (Compl. ¶¶155, 165, 172).
    • Accused Features: The complaint alleges that Defendants test, and instruct customers to use, products like Multi-Plastics' 42SH in a manner that infringes the claimed recycling process (Compl. ¶¶158, 167).

III. The Accused Instrumentality

Product Identification

  • The accused products are heat-shrinkable polyester films, including but not limited to FENC’s SHFTH20, SHFTH30, SHFTH40, SHFTH40-UV, SHFTH50, SHFTQ40, SHFTU40, and SHFTU50; and Multi-Plastics’ 4BSL, 4BSH, 42WL, 42WH, 42UL, 42UH, 42SL, 42SH, 42RL, and 42RH products (collectively, "Accused Heat-Shrinkable Film Products") (Compl. ¶¶2, 32).

Functionality and Market Context

  • The accused products are used as packaging material, particularly for shrink sleeve labels applied to bottles and other containers (Compl. ¶32). The complaint provides a product datasheet for Multi-Plastics' "42SL Shrink Polyester" film, which describes it as a "high shrink/low stress polyester film" (Compl. p. 8). This datasheet includes a graph plotting "Shrinkage %" against "Temperature," showing the film's shrinkage performance (Compl. p. 8). The products are marketed as "Recycle Friendly" and compliant with standards from the Association of Plastic Recyclers (APR), which the complaint alleges is a key feature for brand owners seeking to meet environmental stewardship goals (Compl. ¶36).

IV. Analysis of Infringement Allegations

U.S. Patent No. 9,574,047 Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A heat-shrinkable polyester film having a heat shrink-age initiation temperature of 60° C. or lower, a glass transition temperature (Tg) of 77° C. or lower and a heat shrinkage rate of 2% or more at 60° C., The complaint alleges, upon information and belief, that the accused products, such as Multi-Plastics' 42SL, meet these thermal and shrinkage parameters. ¶47 col. 2:42-49
wherein the film has a heat shrinkage rate of 15% or more at 65° C., 42% or more at 70° C., and 70% or more at 80° C; The product datasheet for the 42SL product shows a shrinkage-temperature curve, which Plaintiff will likely argue demonstrates that these shrinkage rates are met. The datasheet explicitly lists a transverse direction (TD) shrinkage of "> 74.0" at 95°C. ¶47, p. 8 col. 2:49-51
wherein the film is prepared by random-copolymerization of one kind of dibasic acid component with three kinds of diol components; The complaint alleges on information and belief that the accused products are prepared using the claimed copolymerization process. The 42SL datasheet refers to an "Exclusive resin technology." ¶47, p. 8 col. 2:52-55
wherein the dibasic acid component (A1) is one of terephthalic acid and dimethyl terephthalate; and The complaint alleges on information and belief that the accused films are made with the claimed dibasic acid component. ¶47 col. 2:56-58
wherein the diol components are (B1) ethylene glycol, (B2) one of the neopentyl glycol and cyclohexanedimethanol, and (B3) a linear diol component having three or more carbon atoms at a main chain thereof. The complaint alleges on information and belief that the accused films are made with the claimed three-part diol composition. ¶47 col. 2:59-62
  • Identified Points of Contention:
    • Evidentiary Question: The complaint relies on "information and belief" for the chemical composition and manufacturing process of the accused films. A central question will be what factual evidence, such as chemical analysis or discovery from Defendants, Plaintiff can produce to prove that the accused films contain the specific three-diol combination required by claim 1.
    • Technical Question: The infringement allegation hinges on whether the accused films meet the specific numerical thresholds for shrinkage rates at various temperatures (e.g., ≥42% at 70°C). While the provided datasheet for the 42SL product (Compl. p. 8) is probative, litigation will likely involve competing expert analyses and testing of the films to determine if they fall within the claimed ranges under the precise testing conditions outlined in the patent.

U.S. Patent No. 8,632,865 Infringement Allegations

Claim Element (from Independent Claim 1) Alleged Infringing Functionality Complaint Citation Patent Citation
A heat-shrinkable polyester film having a heat-shrinkage change per degree Celsius (%/° C.) along the main shrinkage direction of 1.5 to 3.0 in the range of 60° C. to 70° C., 2.5 to 3.5 in the range of 70° C. to 80° C., 1.0 to 2.0 in the range of 80° C. to 90° C., and 0.1 to 1.0 in the range of 90° C. to 100°C., The complaint alleges, upon information and belief, that the accused 42SH product infringes by having this specific shrinkage profile. The complaint includes a figure from the patent showing an "improved" curve, which it implicitly compares to the accused product's performance. ¶59, p. 14 col. 2:10-15
wherein the heat-shrinkable polyester film is prepared by using a copolyester composition comprising: (i) a dibasic acid component comprising a least 90 mil % of terephthalic acid residue... The complaint alleges upon information and belief that the accused product is made with the claimed copolyester composition. ¶59 col. 2:16-21
and (ii) a diol component comprising (a) 1 to 20 mol % of diethylene glycol, (b) 5 to 30 mil % of neopentyl glycol, and (c) 50 to 90 mol % of ethylene glycol, based on 100 mol % of the diol component. The complaint alleges upon information and belief that the accused product contains the claimed diol components in the specified molar percentages. ¶59 col. 2:21-25
  • Identified Points of Contention:
    • Scope Question: A key dispute may arise over the meaning of "heat-shrinkage change per degree Celsius." The claim requires this rate to fall within specific numerical ranges over four different 10-degree temperature intervals. The interpretation of how this rate is measured and calculated will be critical.
    • Technical Question: Proving infringement requires demonstrating that the accused product's shrinkage curve matches the precise slope requirements of the claim. The complaint does not provide this specific data, stating only that the 42SH product infringes. The case will likely turn on extensive expert testing and analysis to determine the actual shrinkage profile of the accused films and compare it to the claimed ranges.

V. Key Claim Terms for Construction

  • For the ’047 Patent:

    • The Term: "heat shrink-age initiation temperature of 60° C. or lower"
    • Context and Importance: This term is the primary feature distinguishing the invention from prior art that allegedly shrinks at higher temperatures. The entire infringement theory for the ’047 Patent rests on the accused products meeting this low-temperature shrinkage threshold, which is what makes them suitable for HDPE containers. Practitioners may focus on this term because its definition (e.g., how much shrinkage constitutes "initiation") could be dispositive.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The specification does not provide an explicit numerical definition for "initiation," which may allow for an argument that any measurable shrinkage below 60°C meets the limitation. The patent broadly states its purpose is to create a film that solves the problem of conventional films that "start[] to expand at 70° C." (’047 Patent, col. 1:35-37).
      • Evidence for a Narrower Interpretation: Claim 1 itself provides context by also requiring a "heat shrinkage rate of 2% or more at 60° C." A defendant may argue that this co-recited limitation implies that "initiation" must mean achieving at least 2% shrinkage, effectively defining the term by the patent’s own language.

  • For the ’865 Patent:

    • The Term: "heat-shrinkage change per degree Celsius (%/° C.)"
    • Context and Importance: This term defines the core of the invention: a controlled shrinkage rate, not just a total shrinkage amount. The infringement analysis for the ’865 Patent is entirely dependent on measuring this value for the accused films and comparing it to the four distinct numerical ranges in the claim. The precise methodology for calculating this "change" (e.g., as an average over the 10°C range, or an instantaneous rate) will be a central point of contention.
    • Intrinsic Evidence for Interpretation:
      • Evidence for a Broader Interpretation: The specification describes the concept generally as a "gradient of curve at each temperature region" (’865 Patent, col. 2:60-61), which could support a more flexible, averaged interpretation over the specified ranges.
      • Evidence for a Narrower Interpretation: The patent provides detailed tables (Tables 4 and 5) showing specific shrinkage percentages at discrete 10-degree intervals and the calculated change between them for the examples (’865 Patent, col. 7-8). A party could argue that the term should be construed consistently with the specific calculation methodology demonstrated in these examples, potentially narrowing how the "change" is determined.

VI. Other Allegations

  • Indirect Infringement: The complaint alleges induced and contributory infringement for the '435, '691, '897, and '898 Patents. The basis for inducement is that Defendants allegedly instruct their customers on how to use the accused films, for example, by providing guidance on how to heat-shrink them onto containers, thereby causing customers to directly infringe the method claims of these patents (Compl. ¶¶80, 105, 142, 167). Contributory infringement is alleged on the basis that the accused films are not staple articles of commerce and are especially made for the infringing use (Compl. ¶¶87, 112, 149, 174).
  • Willful Infringement: The complaint alleges willful infringement of all patents-in-suit. This allegation is based on Defendants' alleged knowledge of the patents since at least September 2019, as a result of notice letters and other communications from the Plaintiff. The complaint alleges that despite this knowledge, Defendants refused to cease their infringing activities (Compl. ¶¶37-40).

VII. Analyst’s Conclusion: Key Questions for the Case

  1. An Evidentiary Question of Composition and Performance: Can Plaintiff produce sufficient evidence, beyond "information and belief," to prove that the accused films possess the specific chemical compositions (e.g., the three-diol system of the '047 Patent) and meet the precise numerical performance characteristics (e.g., the shrinkage-rate-change profiles of the '865 Patent and the low clumping fraction of the '898 Patent) required by the asserted claims? This will likely require extensive and contested expert testing and analysis.
  2. A Definitional Question of Functional Properties: How will the court construe key claim terms that define the inventions' performance, such as "heat shrink-age initiation temperature" and "heat-shrinkage change per degree Celsius"? The viability of the infringement claims for the '047 and '865 patents, in particular, will hinge on whether the measured properties of the accused products fall within the scope of these terms as construed by the court.
  3. A Question of Intent for Indirect Infringement: For the asserted method patents, does the evidence of Defendants' customer instructions and product documentation show a specific intent to encourage customers to perform the patented recycling processes? The analysis will focus on whether Defendants' actions went beyond merely selling a product to actively inducing the specific infringing acts claimed in the '435, '691, '897, and '898 patents.