Source: https://law.justia.com/cases/federal/appellate-courts/F3/449/1209/521143/
Timestamp: 2020-08-07 04:34:16
Document Index: 367893705

Matched Legal Cases: ['§ 271', '§ 271', '§ 271', '§ 271', '§ 112', '§ 112']

Liquid Dynamics Corporation, Plaintiff-appellee, v. Vaughan Company, Inc., Defendant-appellant, 449 F.3d 1209 (Fed. Cir. 2006) :: Justia
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Liquid Dynamics Corporation, Plaintiff-appellee, v. Vaughan Company, Inc., Defendant-appellant, 449 F.3d 1209 (Fed. Cir. 2006)
US Court of Appeals for the Federal Circuit - 449 F.3d 1209 (Fed. Cir. 2006) June 1, 2006
COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED Steven C. Schroer, Fitch, Even, Tabin & Flannery, of Chicago, Illinois, argue for plaintiff-appellee. With him on the brief were Mark W. Hetzler and Jon A. Birmingham.
This is the second time we have heard an appeal in this case. In the previous appeal, Liquid Dynamics ("LD") contested the claim construction and summary judgment of non-infringement entered against it. Liquid Dynamics Corp. v. Vaughan Co., 355 F.3d 1361 (Fed. Cir. 2004) ("LD I"). In that decision, we found error in the district court's claim construction, vacated the grant of summary judgment, and remanded for proceedings based on the revised claim construction. Id.
We review the denial of a JMOL de novo. Juicy Whip, Inc. v. Orange Bang, Inc., 292 F.3d 728, 736 (Fed. Cir. 2002). Upon review, we consider whether the jury verdict is supported by substantial evidence. Id. In other words, we ask whether the record taken as a whole would support the verdict in the mind of a reasonable person. Id. It is not our duty, however, to reevaluate the weight or credibility of the evidence. Comark Commc'ns, Inc. v. Harris Corp., 156 F.3d 1182, 1192 (Fed. Cir. 1998).
Evidentiary rulings by the district court are reviewed under regional circuit law. Advanced Cardiovascular Sys., Inc. v. Medtronic, Inc., 265 F.3d 1294, 1308 (Fed. Cir. 2001). Thus, we review decisions to admit expert testimony for abuse of discretion under Seventh Circuit law. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S. Ct. 1167, 143 L. Ed. 2d 238 (1999); United States v. Allen, 390 F.3d 944, 949 (7th Cir. 2004).
Inequitable conduct pertains to and arises under the patent laws; we therefore review it pursuant to Federal Circuit law. In re Spalding Sports Worldwide, Inc., 203 F.3d 800, 803-04 (Fed. Cir. 2000). We review an inequitable conduct determination under an abuse of discretion standard and the underlying factual issues of materiality and intent for clear error. Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., 326 F.3d 1226, 1234 (Fed. Cir. 2003).
A patentee may prove direct infringement or inducement of infringement by either direct or circumstantial evidence. Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1272 (Fed. Cir. 1986). There is no requirement that direct evidence be introduced, nor is a jury's preference for circumstantial evidence over direct evidence unreasonable per se. See Fuji Photo Film Co. v. Jazz Photo Corp., 394 F.3d 1368, 1374 (Fed. Cir. 2005); Moleculon Research, 793 F.2d at 1272 (noting "it is hornbook law that direct evidence of a fact is not necessary"); see also Michalic v. Cleveland Tankers, Inc., 364 U.S. 325, 330, 81 S. Ct. 6, 5 L. Ed. 2d 20 (1960) ("Circumstantial evidence is not only sufficient, but may also be more certain, satisfying and persuasive than direct evidence."). Though Dorsch testified that four tanks were outside the scope of the patent claims, the jury could reasonably have discredited that evidence and given more weight to the circumstantial evidence of the Vaughan engineering manual, which was created before litigation began. Similarly, the jury could reasonably rely on the engineering manual and complete records for the remaining Vaughan designs to infer that the missing information on 11 tanks also had infringing structural components.
Vaughan appears to challenge the admissibility and reliability of Lueptow's expert scientific analysis and opinion. LD argues that our previous opinion reversing the district court's grant of summary judgment based on the genuine issue of material fact presented by the vector plots makes the evidence admissible under the law-of-the-case doctrine. Our previous opinion, LD I, did not directly consider the admissibility of the evidence, only that such evidence would be sufficient to create a genuine issue of material fact for trial. 355 F.3d at 1371. Issues not decided by the court in a prior proceeding are not covered by the law-of-the-case doctrine. Stearns v. Beckman Instruments, Inc., 737 F.2d 1565, 1568 (Fed. Cir. 1984). Therefore, the admissibility of Lueptow's testimony had not been previously resolved.
Vaughan's challenges to expert testimony and scientific evidence are analyzed under the Supreme Court's Daubert factors. See Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993). When faced with expert scientific testimony, a district court must first determine "whether the expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact to understand or determine a fact at issue." Id. at 592, 113 S. Ct. 2786. This requires an assessment of the reasoning and methodology underlying the testimony to determine whether it is scientifically valid. Id. In Daubert, the Supreme Court set forth four factors for district courts to consider when evaluating the validity and relevance of scientific evidence pursuant to Rule 702 of the Federal Rules of Evidence. Id. at 592-93, 113 S. Ct. 2786. These factors include (1) whether the methodology can and has been tested, (2) whether the methodology is subject to peer review, (3) the potential rate of error, and (4) the general acceptance of the methodology. Id. at 593-94, 113 S. Ct. 2786. The court further noted that the focus of a court's inquiry into the relevance and reliability of scientific evidence "must be solely on principles and methodology, not on the conclusions that they generate." Id. at 595, 113 S. Ct. 2786.
Here, Vaughan's argument focuses on the parameters Lueptow applied, not on the reliability of CFD analysis in general. Indeed, CFD analysis has been previously recognized in the scientific community and has been recognized as reliable by at least one circuit. See Quiet Tech. DC-8, Inc. v. Hurel-Dubois UK Ltd., 326 F.3d 1333, 1343-44 (11th Cir. 2003). In Quiet Tech., the appellant challenged the credibility of CFD analysis for modeling aerodynamic properties in a jet engine. Id. at 1344. The appellant argued that the expert used incorrect data or was missing data to run the CFD software and used the wrong equations to run his CFD analysis of the engine's aerodynamic properties. Id. Such a flawed analysis, it argued, made the testimony and evidence unreliable. Id. at 1344-45. The court held that such an attack goes more to the weight of the evidence than to its admissibility. "The identification of such flaws in generally reliable scientific evidence is precisely the role of cross-examination." Id. at 1345; see also In re TMI Litig., 193 F.3d 613, 692 (3d Cir. 1999) ("`So long as the expert's testimony rests upon `good grounds,' it should be tested by the adversary process — competing expert testimony and active cross-examination — rather than excluded from jurors ['] scrutiny for fear that they will not grasp its complexities or satisfactory [sic] weigh its inadequacies.'" (quoting Ruiz-Troche v. Pepsi Cola of Puerto Rico Bottling Co., 161 F.3d 77, 85 (1st Cir. 1998))); Wilmington v. J.I. Case Co., 793 F.2d 909, 920 (8th Cir. 1986) ("Virtually all the inadequacies in the expert's testimony urged here by [the defendant] were brought out forcefully at trial . . . . These matters go to the weight of the expert's testimony rather than to its admissibility.").
Vaughan makes one final argument with respect to infringement under 35 U.S.C. § 271(f) by six tanks located outside of the United States. It argues that under § 271(f) there was insufficient evidence that it intended for the foreign purchasers to infringe the '414 patent. Pursuant to § 271(f) (1), a party may be an infringer if it
"A finding of inducement requires both an underlying instance of direct infringement and a requisite showing of intent." Fuji Photo Film Co., 394 F.3d at 1377. Here, although Vaughan contends that the requisite intent showing is missing, " [a] patentee may prove intent through circumstantial evidence." Id.
Accordingly, LD identifies evidence in the record that Vaughan knew of the '414 patent after its first sale to Augusta. Moreover, Vaughan's hiring of Behnke, a former L.D employee with knowledge of the patented design, and Dorsch's statements indicating that Vaughan was relying on nozzle orientations from Behnke, support the proposition that Vaughan intended for its Augusta design to infringe the claims of the '414 patent. Furthermore, Vaughan's engineering manual was sent to its customers and is replete with examples that are similar to the Augusta designs. This constitutes circumstantial evidence that Vaughan intended for its subsequent buyers, including foreign buyers, to install systems that infringe the claims of the '414 patent. Vaughan argues that the engineering manual itself expresses an intent to mix by rotation, such that Vaughan's dissemination of the manual did not intend its customers to create the infringing helical flow. Vaughan's arguments ask us to reweigh the evidence, a task reserved for the jury, not this court. See Teleflex, Inc. v. Ficosa N. Am. Corp., 299 F.3d 1313, 1335 (Fed. Cir. 2002). Thus, we hold that there is substantial evidence to support the jury's verdict under § 271(f).
Vaughan's second allegation of error is that the court should have found the '414 patent invalid because the specification did not disclose the inventor's best mode of practicing the invention and did not enable the claims. See BJ Servs. Co. v. Halliburton Energy Servs., 338 F.3d 1368, 1371-72 (Fed. Cir. 2003); Eli Lilly & Co. v. Barr Labs., 251 F.3d 955, 963 (Fed. Cir. 2001). It argues that the inventors failed to disclose the need for reducers on the tank nozzles and that the specification failed to enable the creation of helical flow in the tank.
Inventors are required by 35 U.S.C. § 112, ¶ 1 to disclose the best mode for practicing their claimed inventions. A finding of patent invalidity based on best mode "requires clear and convincing evidence that the inventor both knew of and concealed a better mode of carrying out the claimed invention than that set forth in the specification." Teleflex, 299 F.3d at 1330. This is a two-part factual test inquiring into (1) whether the inventor subjectively "considered a particular mode of practicing the invention to be superior to all other modes at the time of filing" the application and (2) whether the inventor adequately disclosed that superior mode. Id.; accord Eli Lilly & Co., 251 F.3d at 963. The best mode requirement does not require the disclosure of "routine details" that would be apparent to one of ordinary skill in the art practicing the invention. Teleflex, 299 F.3d at 1331-32. "Known ways of performing a known operation cannot be deemed intentionally concealed absent evidence of intent to deliberately withhold that information." High Concrete Structures, Inc. v. New Enter. Stone & Lime Co., 377 F.3d 1379, 1384 (Fed. Cir. 2004).
In light of all the evidence presented on this issue, a reasonable jury could conclude that Vaughan failed to demonstrate by clear and convincing evidence that LD did not disclose the best mode. First, the '414 patent states that " [t]he jet nozzle units 20 are preferably of a type disclosed in U.S. Pat. No. 4,332,484 (herein incorporated by reference) [(`the '484 patent')] and commercially available from A.O. Smith, as part of its Slurrystore . . . systems." '414 patent, col. 4, ll. 52-55. The '484 patent describes a nozzle that discharges "a high velocity high volume jet," col. 3, ll. 50-51, and a nozzle which is "concentrically reduced in diameter in its upward extend . . .," col. 3, ll. 65-68. Second, Crump testified that the Plymouth and Indiana Packers installations did not incorporate the invention and were used to achieve zone mixing instead of helical flow. Third, LD presented evidence that adding reducers is a routine detail and did not need to be disclosed to a person of ordinary skill in the art. Fourth, Lueptow testified that a particular flow velocity did not matter given that the fluid flow began to dissipate further from the nozzle.
In order to enable the claims of a patent pursuant to § 112, the patent specification must teach those of ordinary skill in the art "how to make and use the full scope of the claimed invention without undue experimentation." Bruning v. Hirose, 161 F.3d 681, 686 (Fed. Cir. 1998). Some experimentation is permissible although it cannot be unduly excessive. Hybritech, Inc. v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1384 (Fed. Cir. 1986). Enablement is a question of law which we ultimately review de novo, but it is based on factual findings that are reviewed for clear error. Bruning, 161 F.3d at 686. Here, because the underlying inquiry was inherently factual, "we look to whether a reasonable jury could have made the underlying factual findings necessary to provide substantial evidence in support of its conclusion." BJ Servs. Co., 338 F.3d at 1371-72.
A finding of willful infringement is made after considering the totality of the circumstances. See Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337, 1342-43 (Fed. Cir. 2004) (en banc). The evidence is weighed and evaluated by the trier of fact. Id. at 1343. "The drawing of inferences, particularly in respect of an intent-implicating question such as willfulness, is peculiarly within the province of the fact finder that observed the witnesses." Rolls-Royce, Ltd. v. GTE Valeron Corp., 800 F.2d 1101, 1110 (Fed. Cir. 1986).
Courts consider several factors when determining whether an infringer has acted in bad faith and whether damages should be increased. They include: "(1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed; . . . (3) the infringer's behavior as a party to the litigation;" (4) "defendant's size and financial condition;" (5) "closeness of the case;" (6) "duration of defendant's misconduct;" (7) "remedial action by the defendant;" (8) "defendant's motivation for harm;" and (9) "whether defendant attempted to conceal its misconduct." Read Corp. v. Portec. Inc., 970 F.2d 816, 826-27 (Fed. Cir. 1992) (superseded on other grounds as recognized in Hoechst Celanese Corp. v. BP Chems. Ltd., 78 F.3d 1575, 1578 (Fed. Cir. 1996)). Good faith may normally be shown by obtaining the advice of legal counsel as to infringement or patent validity. See id. at 828. If counsel's opinion is found to be incompetent, however, a fact finder may discount its usefulness in determining a party's good faith. See id. at 828-29; see also Goodwall Constr. Co. v. Beers Constr. Co., 991 F.2d 751, 758 (Fed. Cir. 1993) (holding that a jury could have concluded that the infringing party concealed incriminating evidence from its opinion counsel).
Though Vaughan relies heavily on its opinion of counsel, LD presented flaws in that opinion's factual basis. LD explains that patent counsel was not given the complete CFD analysis because he was not provided with the vertical vector plots of fluid flow. Patent counsel was advised that the vertical plots did not show anything of significance. In fact, the report on the Merced and generic 50-foot tanks explained that the vertical plots indicated vertical flow and secondary flow vortices. The jury could use such a concealment of evidence from the attorney to discount the opinion. See Goodwall Constr., 991 F.2d at 758. Although Vaughan asserts that the district court's enhancement of damages should be reversed, the primary basis for this position is that the jury's finding of willfulness should be reversed, an argument we have already rejected. Vaughan's only other argument is that litigation misconduct did not justify enhancement but that argument was made only in a footnote in the opening brief and therefore was not sufficiently preserved. SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1320 (Fed. Cir. 2006).
However, Vaughan fails to establish that the inventors had the requisite intent to deceive. Intent is a subjective inquiry into whether the inventor knew the information was material and chose not to disclose it. See id. at 1239. Here, Vaughan asks us to reweigh the credibility of the evidence and testimony, something we cannot do. See LNP Eng'g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1361 (Fed. Cir. 2001). The trial court relied on the evidence that Crump did not believe the prior installations were necessary disclosures because they were not embodiments of the invention and were similar to other disclosures. Furthermore, Crump testified that he did inform the examiner of the prior tanks. We see no reversible error in the district court's analysis of intent. Thus, the court's finding of no inequitable conduct was not clearly erroneous.