Court Opinion

ID: 772785
Source: CourtListenerOpinion
Date Created: 2012-04-18 11:17:00+00
Date Added: 2024-06-11T17:56:06.914619
License: Public Domain

245 F.3d 1364 (Fed. Cir. 2001)
WAYMARK CORPORATION and CARAVELLO FAMILY LP, Plaintiffs-Appellants,v.PORTA SYSTEMS CORPORATION, Defendant-Appellee.United States Court of Appeals for the Federal Circuit
00-1327
DECIDED: April 6, 2001

Appealed from: United  States  District  Court  for  the Southern and District of Florida Judge Donald M. Middlebrooks
Joseph J. Zito, of Damascus, Maryland, argued for plaintiffs-appellants.
With him on the brief was Kendal M. Sheets.
Gerald T. Bodner, Hoffmann & Baron, LLP, of Syosset, New York, argued for defendant-appellee. With him on the brief were Charles R. Hoffmann, and Kevin E. McDermott.
Before RADER, Circuit Judge, PLAGER, Senior Circuit Judge, and DYK, Circuit Judge.
RADER, Circuit Judge.

1
On a motion for summary judgment, the United States District Court for the  Southern District of Florida determined that Porta Systems Corporation  (Porta Systems) did not infringe Carvello Family LP and Waymark  Corporation's (collectively, Waymark) U.S. Patent No. 5,505,929 ('929  patent). Waymark Corp. v. Porta Sys. Corp., No. 98-8545-Civ (S.D. Fla. Feb.  25, 2000) (Omnibus Order). Because the district court correctly granted  summary judgment of noninfringement under 35 U.S.C. § 271(a) (1994 & Supp.  IV 1998), but relied on an incorrect interpretation of § 271(f)(2) in  reconsidering summary judgment, this court affirms-in-part, vacates-in-  part, and remands.

I.

2
The '929 patent claims a system and corresponding method for monitoring the  capacity of batteries in a string. The system monitors the batteries and  sounds an alarm if a battery is in danger of dipping below an acceptable  capacity. The patent touts the invention as particularly suited for  monitoring multiple strings of batteries remote from a central monitoring  station. The inventors, including Ronald Caravello, filed the application  that resulted in the '929 patent in 1995 and recorded an assignment to  Fibercorp, Inc. The '929 patent issued in January 1998.

3
In 1996, Porta Systems began assisting Fibercorp in developing and  marketing a battery monitoring system called the Battscan. However,  Fibercorp did not license Porta Systems to manufacture or market the  Battscan. In 1997, Fibercorp filed for bankruptcy. After Fibercorp's  bankruptcy, Porta Systems continued to develop the Battscan system. Porta  Systems tested some Battscan components in New York. Porta Systems also  shipped components to Mexico where Porta Systems planned to build twenty  Battscan systems.

4
Ellen Caravello purchased the rights to the Battscan technology, including  the application for the '929 patent, from the bankruptcy trustee. On July  5, 1998, Ellen Caravello assigned the '929 patent to Caravello Family LP.  Caravello Family LP and Waymark Corporation (the alleged exclusive  licensee) filed this suit against Porta Systems one month later on August  5, 1998. Ellen Caravello is not a party to this suit.

5
After Waymark filed this suit in August 1998, Porta Systems ceased all work  on the Battscan system and returned the developmental components from  Mexico. Porta Systems never built a working Battscan system.

6
Porta Systems moved for summary judgment of noninfringement. The district  court determined that Waymark only had the right to sue for infringement  after July 5, 1998, the date that Ellen Carvello assigned the patent to  Caravello Family LP. Omnibus Order, slip op. at 9. Waymark does not dispute  this determination. The district court further determined that Waymark had  not shown any disputed issues of material fact about infringement of the  '929 patent because Porta Systems never made a complete system. Moreover  Waymark based its infringement claim on a comparison of the '929 patent  claims to a 1996 brochure that depicted Fibercorp's system, not to Porta  Systems' system itself. Id. at 12-15.

7
Waymark then petitioned the district court to reconsider its decision,  asserting for the first time that Porta Systems infringed under §  271(f)(2). The district court apparently denied the Waymark's petition, but  proceeded to address Waymark's § 271(f)(2) argument. Waymark Corp. v. Porta  Sys. Corp., No. 98-8545-Civ, slip op. at 1-2 (S.D. Fla. Apr. 11, 2000)  (Recons. Decision). Specifically, the district court found that Waymark's §  271(f)(2) argument lacked merit because Waymark did not produce evidence  that Porta Systems made an infringing system either inside or outside the  United States during the relevant time. Id. Waymark appeals the district  court's summary judgment and its reconsideration decision. This court has  jurisdiction under 28 U.S.C. § 1295(a)(1) (1994).

II.

8
This court reviews a district court's grant of summary judgment without  deference. Conroy v. Reebok Int'l, Ltd, 14 F.3d 1570, 1575, 29 USPQ2d 1373,  1377 (Fed. Cir. 1994). Summary judgment is appropriate only "if the  pleadings, depositions, answers to interrogatories, and admissions on file,  together with the affidavits, if any, show that there is no genuine issue  as to any material fact and that the moving party is entitled to a judgment  as a matter of law." Fed. R. Civ. P. 56(c). In reviewing a summary judgment  ruling, this court draws all reasonable inferences in favor of the non-  movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). This  court reviews the district court's statutory interpretation, a legal issue,  without deference. Vectra Fitness, Inc. v. TNWK Corp., 162 F.3d 1379, 1382,  49 USPQ2d 1144, 1146 (Fed. Cir. 1998).

9
This court first considers the district court's determination on summary  judgment that Porta Systems did not infringe under § 271(a) by testing  Battscan components within the United States. Section 271(a) states,  "whoever without authority makes, uses, offers to sell, or sells any  patented invention, within the United States or imports into the United  States any patented invention during the term of the patent therefor,  infringes the patent." This court has established that testing is a use of  the invention that may infringe under § 271(a). Roche Prods. v. Bolar  Pharm. Co., 733 F.2d 858, 863, 221 USPQ 937, 941 (Fed. Cir. 1984),  superseded-in-part by 35 U.S.C. § 271(e). Nevertheless, the infringer must  use the "patented invention." 35 U.S.C. § 271(a). In addressing an alleged  infringement of a patented combination in Deepsouth Packing Co. v. Laitram  Corp., 406 U.S. 518, 529 , 173 USPQ 769, 773 (1972), the Supreme Court  stated:

10
No wrong is done the patentee until the combination is formed. His monopoly does not cover the manufacture or sale of separate elements capable of being, but never actually, associated to form the invention. Only when such association is made is there a direct infringement of his monopoly, and not even then if it is done outside the territory for which the monopoly was granted.

11
Because Porta Systems tested only components of the Battscan combination  within the United States, it did not use the claimed invention and did not  infringe under § 271(a).

12
In Paper Converting Machines Co. v. Magna-Graphics Corp., 745 F.2d 11, 19-  20, 223 USPQ 591, 597 (Fed. Cir. 1984), this court recognized an  infringement where the party tested all components necessary to meet the  claim limitations and shipped them to customers, but did not assemble them  until after the patent expired. This court stated:

13
Where . . . significant, unpatented assemblies of elements are tested during the patent term, enabling the infringer to deliver the patented combination in parts to the buyer, without testing the entire combination together as was the infringer's usual practice, testing assemblies can be held to be in essence testing the patented combination and, hence, infringement.

14
Id. This court distinguished Deepsouth as concerned primarily with "giving  extraterritorial effect to United States patent protection." Id. at 17.  Paper Converting Machines, on the other hand, addressed enforcement of a  patent beyond its expiration. This court thus held "that the expansive  language used in Deepsouth is not controlling in the present case." Id.  Like Deepsouth, this case presents the possibility of giving United States  patent protection extraterritorial effects. Like the accused infringer in  Deepsouth, Porta Systems exported components for assembly in a foreign  country. See Deepsouth, 406 U.S. at 523 -24. Accordingly, the analysis of  Deepsouth controls in this case.

15
Because Porta Systems tested within the United States only components  without patent protection, Deepsouth dictates that Porta Systems has not  infringed the '929 patent under § 271(a). Accordingly, this court affirms  the district court's summary judgment under § 271(a).

III.

16
In denying Waymark's motion for reconsideration, which was based on its new  argument that Porta Systems infringed under § 271(f)(2), the district court  stated:

17
Plaintiffs' motion fails to offer any new evidence which shows that an infringing product was ever made, used, sold or offered for sale, either inside or outside the United States, between July 5, 1998 and August 27, 1998. Consequently, Plaintiffs' argument that Defendant contributed to the infringement of the '929 patent in suit under 35 U.S.C. § 271(f)(2) by shipping components to Mexico is without merit. There can be no contributory infringement without the fact or intention of direct infringement.

18
Recons. Decision, slip op. at 1-2. While purporting to deny Waymark's  reconsideration motion, the district court proceeded to reconsider summary  judgment and rule on Waymark's new argument under § 271(f)(2). Based on its  consideration of the merits of that argument, the trial court determined  that summary judgment was still proper because Porta Systems had not "made,  used, sold, or offered for sale" an infringing product. Id. at 1. The  district court construed § 271(f)(2) to require actual assembly of an  infringing product. Id.

19
Thus, to address the district court's summary judgment, this court must  determine whether § 271(f)(2) requires actual combination or assembly of  shipped components. Section 271(f)(2) states:

20
Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

21
35 U.S.C. § 271(f)(2) (emphasis added). On its face, § 271(f)(2) requires  that the infringer only "intend[] that such component will be combined."  At no point does the statutory language require or suggest that the  infringer must actually combine or assemble the components. A party can  intend that a shipped component will ultimately be included in an assembled  product even if the combination never occurs.

22
Also, § 271(f)(2) does not incorporate the doctrine of contributory  infringement. Section 271(f)(2) states that whoever meets its requirements  "shall be liable as an infringer." In contrast, § 271(c), a contributory  infringement subsection, states that whoever meets its requirements "shall  be liable as a contributory infringer" (emphasis added), thereby making  infringement under § 271(c) dependent on an act of direct infringement.  Thus, title 35 does make some acts of indirect infringement dependent on a  separate act of direct infringement, but § 271(f)(2) does not include  language with that meaning. Accordingly, the statutory language in this  section does not require an actual combination of the components, but only  a showing that the infringer shipped them with the intent that they be  combined.

23
The history of the enactment of § 271(f)(2) also does not show that the  statutory language requires actual combination of shipped components.  Although the legislative history accompanying enactment of § 271(f)(2)  suggests that this section was a response to the Deepsouth decision, see,  e.g., S. Rep. No. 98-663, at 2-3 (1984), this history does not address  whether § 271(f)(2) requires actual assembly. Without requiring actual  assembly of shipped components, § 271(f)(2) already requires a result  different from the Deepsouth decision. Moreover isolated comments about  assembly in reference to § 271(f)(2) do not address actual, as opposed to  intended, combination. See, e.g., 130 Cong. Rec. H28069 (1984) ("Subsection  271(f) makes it an infringement to supply components of a patented  invention, or to cause components to be supplied, that are to be combined  outside the United States.").

24
Porta Systems argues that § 271(f)(2) impermissibly creates liability for  attempted patent infringement. However, shipping components of an invention  abroad without combining them is no more an "attempt" than offering to sell  an invention without actually selling it. See 35 U.S.C. § 271(a) ("Except  as otherwise provided in this title, whoever without authority . . . offers  to sell . . . any patented invention, within the United States . . . during  the term of the patent therefor, infringes the patent."). Admittedly,  infringement without a completed infringing embodiment is not the norm in  patent law, but it is reasonable in the context of § 271(f)(2). If  § 271(f)(2) required actual assembly abroad, then infringement would depend  on proof of infringement in a foreign country. This requirement would both  raise the difficult obstacle of proving infringement in foreign countries  and pose the appearance of "giving extraterritorial effect to United States  patent protection." Paper Converting Mach., 745 F.2d at 17. Thus, the  language of § 271(f)(2) addresses the implications of extraterritorial  enforcement consistently. The statute does not require actual assembly.  Accordingly, the district court erred by holding that § 271(f)(2) required  an actual combination of shipped components.

25
Porta Systems argues that even if § 271(f)(2) does not require actual  combination of the components, Waymark has not provided sufficient proof to  create a genuine issue of material fact regarding infringement under §  271(f)(2). Having concluded that Porta Systems did not combine the  components of the '929 patent, the district court did not address the  remaining requirements of § 271(f)(2). This court declines to address  issues not decided by the district court. Rather, this court vacates the  district court's summary judgment under § 271(f)(2) and remands for further  proceedings.

CONCLUSION

26
Because the district court correctly granted summary judgment that Porta  Systems did not infringe the '929 patent under § 271(a), this court affirms  that partial summary judgment. However, because the district court  reconsidered summary judgment and relied on an erroneous statutory  construction in entering summary judgment under § 271(f)(2), this court  vacates that partial summary judgment and remands for the district court to  reconsider § 271(f)(2).

COSTS

27
Each party shall bear its own costs.

28
AFFIRMED-IN-PART, VACATED-IN-PART and REMANDED.