Court Opinion

ID: 209489
Source: CourtListenerOpinion
Date Created: 2011-03-13 07:54:07+00
Date Added: 2024-06-11T17:27:56.588985
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals for the Federal Circuit
                                        2008-1167

                               LACKS INDUSTRIES, INC.,

                                                      Plaintiff-Appellant,

                                             v.

                   MCKECHNIE VEHICLE COMPONENTS USA, INC.
                     (doing business as Thompson International),

                                                      Defendant-Appellee,

                                            and

                         HAYES WHEEL INTERNATIONAL, INC.,

                                                      Defendant-Appellee.

       Steven L. Underwood, Price, Heneveld, Cooper, DeWitt & Litton, LLP, of Grand
Rapids, Michigan, argued for plaintiff-appellant. With him on the brief were Matthew J.
Gipson, Andrea Z. Warmbier, and David W. Wicklund, Shumaker, Loop & Kendrick, LLP,
of Toledo, Ohio.

       J. Michael Huget, Butzel Long, PC, of Ann Arbor, Michigan, argued for defendant-
appellee McKechnie Vehicle Components USA, Inc. With him on the brief was John C.
Blattner.

      Stephen E. Glazek, Barris Sott Denn & Driker, LLC, of Detroit, Michigan, argued for
defendant-appellee Hayes Whell International, Inc. With him on the brief was Josh J.
Moss. Of counsel was Mark J. Sobanski, MacMillan, Sobanski & Todd, LLC, of Toledo,
Ohio.

Appealed from: United States District Court for the Eastern District of Michigan

Senior Judge John Feikens
                     NOTE: This disposition is nonprecedential.

 United States Court of Appeals for the Federal Circuit

                                     2008-1167

                             LACKS INDUSTRIES, INC.,

                                                           Plaintiff-Appellant,
                                          v.

                 MCKECHNIE VEHICLE COMPONENTS USA, INC.
                   (doing business as Thompson International),

                                                           Defendant-Appellee,

                                         and

                       HAYES WHEEL INTERNATIONAL, INC.,

                                                           Defendant-Appellee.

      Appeal from United States District Court for the Eastern District
      of Michigan in case no. 96-CV-75692, Senior Judge John Feikens.

                           __________________________

                           DECIDED: November 21, 2008
                           __________________________

Before MICHEL, Chief Judge, CLEVENGER and MOORE, Circuit Judges.

MICHEL, Chief Judge.

      Plaintiff-Appellant Lacks Industries, Inc. (“Lacks”) appeals from the grant of

summary judgment of invalidity in favor of Defendants-Appellees McKechnie Vehicle

Components USA, Inc. and Hayes Wheel International, Inc. (collectively, “Defendants”),

and the denial of Lacks’ motion for summary judgment on validity. See Order, Lacks
Indus., Inc. v. McKechnie Vehicle Components USA, Inc., No. 96-75692 (E.D.Mich.

Nov. 20, 2007) (“Summary Judgment Order”). The district court held that claims 11-13,

20-22, and 24-25 (“the Remaining Claims”) of United States Patent No. 5,597,213 (“the

‘213 patent”) were invalid under 35 U.S.C. § 102(b) due to Lacks’ alleged pre-critical

date on-sale activities. We heard oral argument on November 6, 2008. We affirm the

district court’s denial of Lacks’ motion for summary judgment as we find no abuse of

discretion. However, because we conclude that there remain genuine issues of material

facts, the district court’s grant of Defendants’ motion for summary judgment is reversed,

and the case is remanded.

                                 I.     BACKGROUND

      Lacks commenced a multi-patent infringement action against Defendants in the

United States District Court for the Eastern District of Michigan on December 18, 1996.

In this appeal, the only patent left is the ‘213 patent. The claims at issue, the Remaining

Claims, all relate to methods for assembling an overlay to a wheel.

      This is our second review of the protracted litigation. In the first round, a special

master found after a bench trial that Defendants infringed the Remaining Claims but that

the same claims were invalid under § 102(b) as a result of Lacks’ pre-critical date

commercial activities. The Special Master found that none of Lacks’ activities was a

commercial offer for sale as defined by contract law. However, he concluded that under

the totality of the circumstances, there was a definite offer. The district court adopted

the Special Master’s findings and conclusions.

      On appeal and cross-appeal to this court, we affirmed the finding of infringement

but vacated the invalidity decision.       Lacks Indus., Inc. v. McKechnie Vehicle

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Components USA, Inc., 322 F.3d 1335 (Fed. Cir. 2003). We concluded that the Special

Master erred by applying an outdated legal standard that was superseded by Group

One, Ltd. v. Hallmark Cards, 254 F.3d 1041, 1048 (Fed. Cir. 2001), a decision handed

down after the Special Master issued his findings and conclusions. Lacks Indus., 322

F.3d at 1347. We remanded the case with the instruction that “the district court (or

Special Master) should resolve whether or not it needs to take additional evidence on

sales practice in the automotive industry to determine if the sales promotion activities by

Lacks rise to a contractual offer for sale (and, of course, take such evidence if

necessary).” Id. at 1351.

       On remand, the Special Master determined that additional evidence regarding

sales practice in the automotive industry was indeed warranted and that further

discovery was also warranted to explore “what subsequently occurred in … [Lacks’]

sales promotional activities that [were] already of record.” After extensive discovery, the

parties filed cross-motions for summary judgment on the issue of whether the

Remaining Claims were invalid under § 102(b) because of Lacks’ alleged on-sale

activities. The Special Master found that five pre-critical date documents constituted

commercial offers for sale, as defined in Group One. The district court adopted the

Special Master’s Report and Recommendation in its entirety, denied Lacks’ motion for

summary judgment on validity, and entered summary judgment of invalidity in favor of

Defendants.

       Lacks timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

                                  II.    DISCUSSION

A.    Standard of Review

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       We review a district court’s grant of summary judgment de novo. Ethicon Endo-

Surgery, Inc. v. U.S. Surgical Corp., 149 F.3d 1309, 1315 (Fed. Cir. 1998). By contrast,

we give considerable deference to the trial court, and “will not disturb a trial court’s

denial of summary judgment unless we find that the court has indeed abused its

discretion.”   Little Six, Inc. v. United States, 280 F.3d 1371, 1373 (Fed. Cir. 2002)

(citation and quotation omitted).

       Summary judgment is appropriate when no genuine issue as to any material fact

has been shown by the non-movant’s evidence and the moving party is entitled to

judgment as a matter of law. Fed. R. Civ. P. 56(c). Thus, summary judgment may be

granted when no “reasonable jury could return a verdict for the nonmoving party.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).         In deciding whether

summary judgment is appropriate, we view the evidence in a light most favorable to the

opposing party and resolve doubts in its favor. Ethicon, 149 F.3d at 1315. This means

all reasonable inferences must be drawn in the non-movant’s favor. At the same time,

“in ruling on a motion for summary judgment, the judge must view the evidence

presented through the prism of the substantive evidentiary burden.” Anderson, 477

U.S. at 254.

B.     Analysis

       The district court adopted the Special Master’s findings and conclusions that five

documents constituted pre-critical date commercial offers for sale under § 102(b) and

that, all of the Remaining Claims were invalid. The parties dispute: (1) whether any of

the documents rises to the level of a commercial offer under the Group One standard;

(2) whether some of the documents were communicated to the alleged offerees prior to

                                           4
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the critical date; and (3) whether the subject matter of any of the alleged offers

correlates to the methods of the Remaining Claims.

       To prevail on an on-sale bar defense, an accused infringer must demonstrate by

clear and convincing evidence that there was a definite sale or offer for sale of the

claimed invention prior to the critical date. Linear Tech. Corp. v. Micrel, Inc., 275 F.3d

1040, 1047 (Fed. Cir. 2001) (citation and quotation marks omitted). “Only an offer

which rises to the level of a commercial offer for sale, one which the other party could

make into a binding contract by simple acceptance (assuming consideration),

constitutes an offer for sale under § 102(b).” Group One, 254 F.3d at 1048. In addition,

to satisfy the on-sale bar, the subject matter of the sale or offer for sale must satisfy

each limitation of the claim, though it may do so inherently.          Scaltech, Inc. v.

Retec/Tetra, L.L.C., 269 F.3d 1321, 1329 (Fed. Cir. 2001). Inherency, however, may

not be established merely by probabilities or possibilities. Id.

1.     The Correlation Between the Alleged Offers and the Methods of the Remaining

       Claims

       Lacks argues that the five documents cannot invalidate the Remaining Claims

under the on-sale bar because they “do not unambiguously require practice of any of

the methods of the Remaining Claims.” The Special Master rejected Lacks’ argument

on three grounds: the law of the case, waiver, and the absence of affirmative evidence.

We address each in turn.

       First, the Special Master noted that in the prior round of litigation, he had found

that “the assembly method that Lacks was offering to perform … coincided with the

subject matter of the Remaining Claims.”           Acknowledging that we vacated and

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2008-1167
remanded the invalidity ruling, the Special Master nevertheless explained that “[n]othing

is described as vacated except the ‘finding of invalidity.’” He stated that his “earlier

reliance on a later superseded legal standard to reach the ultimate conclusion of

invalidity did not taint the underlying findings concerning such issues as … the

correlation between the assembly method that Lacks was attempting to commercialize

and the method covered by the Remaining Claims.” Therefore, the Special Master

concluded that his factual conclusions on the correlation issue “survived the Federal

Circuit’s decision and are part of the mandate” and “constitute the law of the case.” We

disagree.

       The doctrine of law of the case generally bars retrial of issues that were

previously resolved on appeal, assuming one was taken.             Intergraph Corp. v. Intel

Corp., 253 F.3d 695, 697 (Fed. Cir. 2001). Issues not decided by the reviewing court in

a prior proceeding are not covered by the law of the case doctrine. E-Pass Techs., Inc.

v. 3Com Corp., 473 F.3d 1213, 1218 (Fed. Cir. 2007) (citation and quotation omitted).

In addition, courts may depart from the law of the case under certain circumstances,

including the discovery of new and different material evidence that was not presented in

the prior litigation, or an intervening change of controlling legal authority, or when the

prior decision is clearly incorrect and its preservation would work a manifest injustice.

Id. at 698.

       In the last appeal, we did not decide the correlation issue. We first note that the

Special Master’s findings on correlation in the first round of litigation is insufficient as it

includes only general conclusions, and no claim-by-claim and limitation-by-limitation

analysis, as we show later in this opinion. More importantly, the five documents now at

                                              6
2008-1167
issue were not even part of the record then. We faced no factual findings by the Special

Master on the correlation issue regarding these newly-discovered documents. Thus, we

could not have affirmed, explicitly or implicitly, any factual finding not in existence at the

time of the last appeal. The five specific documents were only discovered post-remand

and then used for determination of the commercial offer for sale under the new Group

One standard.       They are substantially different from the evidence gathered and

adjudicated under the prior, totality-of-circumstances standard. Therefore, law of the

case does not settle the correlation issue.

         Similarly, in the last appeal, Lacks could not have challenged the correlation

issue regarding these specific documents because they were not a part of the record.

Accordingly, Lacks did not waive its no-correlation argument with respect to these five

documents.

         Lastly, the Special Master faulted Lacks for “not com[ing] forward with any

affirmative evidence that the offered assembly method was other than the patented

method.” Here again, the Special Master erred. As we have previously stated, “[a] non-

movant need not always provide affidavits or other evidence to defeat a summary

judgment motion. If, for example, the movant bears the burden and its motion fails to

satisfy that burden, the non-movant is not required to come forward with opposing

evidence.” Zenith Elecs. Corp. v. PDI Commc’n Sys., 522 F.3d 1348, 1363 (Fed. Cir.

2008).

         In this case, Defendants, having the ultimate burden of proving invalidity by clear

and convincing evidence, also have the initial burden of going forward with evidence to

support their allegation that there is at least one such offer for sale that corresponds to

                                              7
2008-1167
the methods of Remaining Claims. On appeal, Defendants point to their Reply Brief in

support of their motion for summary judgment. They argue that “the record includes a

veritable mountain of case-by-case evidence that the process offered by Lacks in each

of the Five Offers did indeed correspond to the invention of the Remaining Claims.”

They assert that “[t]his evidence constitutes a powerful prima facie showing” on the

correlation issue.

       However, the portion of the Reply Brief that Defendants cite contains only vague,

general statements.    We discern neither claim-by-claim nor limitation-by-limitation

analysis of whether the subject matter of any of the five alleged offers corresponds to

the methods of any of the Remaining Claims. 1 For example, Defendants assert that

during the pre-critical date period, “Lacks focused exclusively on the invention of the

Remaining Claims as the means for attaching a ‘closely-conforming’ cladding to a

wheel.” We first observe that during the same time period, Lacks filed several other

patent applications covering different methods for assembling an overlay to a wheel.

Indeed, the ‘213 patent itself includes several other assembly methods. Such objective

evidence appears to be in direct contradiction with Defendants’ assertion. At the very

least, under the appropriate legal standard for summary judgment, when the evidence is

viewed in a light most favorable to Lacks, we cannot conclude that the subject matter of

any document satisfies each and every claim limitation of any of the Remaining Claims.

See Scaltech, 269 F.3d at 1329.

       1
               Under the patent statute, the validity of each claim must be considered
separately. See 35 U.S.C. § 282 (“Each claim of a patent (whether in independent,
dependent, or multiple dependent form) shall be presumed valid independently of the
validity of other claims . . . .”). The district court, in adopting the Special Master’s
findings, erred in only considering a single claim in the analysis.
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2008-1167
       Because Defendants did not meet their initial burden to support their allegation

“that the process offered by Lacks in each of the Five Offers did indeed correspond to

the invention of the Remaining Claims,” the district court erred in adopting the Special

Master’s findings on the correlation issue and in granting summary judgment of

invalidity in Defendants’ favor.

2.     The Pre-Critical Date Offers for Sale

       With respect to the pre-critical date offers, we hold that genuine issues of

material fact exist as to whether any of the five documents in dispute rises to the level of

a commercial offer or whether some of the alleged offerers were communicated to the

offerees prior to the critical date. Therefore, the grant of summary judgment of invalidity

in Defendants’ favor was inappropriate for this reason as well.

       For example, the Special Master concluded that “in accordance with the course

of dealing and usage of trade in the automobile industry,” all five documents satisfied

the Group One test for a commercial offer. It is true that when we remanded the case,

we instructed that the district court should consider the sales practice in the automobile

industry to determine if any of Lacks’ documents of its sales activities rises to a

contractual offer for sale. Lacks Indus., 322 F.3d at 1351. On remand, Defendants’

experts submitted that in the automobile industry, an OEM, such as Chrysler, would

often accept a supplier’s initial quote, such as a SCORE proposal, subject to possible

future revision. However, Lacks’ witnesses testified that the purpose of submitting a

SCORE proposal was “first to garnish [if Chrysler is] even interested and then [if the

proposal is] even valid . . . .” When viewing this record in a light most favorable to

Lacks and resolving doubts in favor of Lacks, we cannot conclude that Defendants have

                                               9
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established an automobile industry practice by clear and convincing evidence such that

a reasonable fact-finder could not decide in Lacks’ favor.

       Similarly, one alleged offeree testified that there was no reason for him to think

that he received a Lacks’ internal memorandum, an alleged offer, after the critical date.

However, he also stated that because it had been so many years, his memory was very

vague. 2 Another alleged offeree testified that he did not believe that another Lacks’

internal memorandum, also an alleged offer, was ever given to him by Lacks. We

conclude, based on such evidence, especially when viewed in a light most favorable to

Lacks, that there are genuine issues as to material facts regarding if and when the

documents at issue were communicated to the alleged offerees. Because a reasonable

fact finder could find that there is no clear and convincing evidence that these

documents were communicated to the alleged offeree prior to the critical date and

therefore, could return a verdict for Lacks, summary judgment of invalidity in favor of

Defendants is inappropriate.

       Lacks asserts that the district court incorrectly denied its motion for summary

judgment on validity.    However, the trial court has discretion to deny a motion for

       2
               At oral argument, our attention was brought to the witness’s testimony
stating that “there’s no reason for me to think it was after [the critical date,] I guess. I
guess that’s awful[ly] vague. It’s been so many years.” When asked whether he
considered this to be clear and convincing evidence, Defendants’ counsel answered
“Yes!” We are aware of counsel’s zealousness in representing the clients. We are also
mindful that this litigation has been drawn out for much too long. Still, we are hard-
pressed to equate “awful[ly] vague” speculation to clear and convincing evidence. It is
our opinion that, an effective advocate would better serve the clients’ interests, and
become a more trustworthy officer of the court, by using sound judgment to deal with
less favorable facts, not by asserting questionable statements, even when under
pressure.
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summary judgment. Lacks does not argue, and we do not find, any abuse of discretion.

Therefore, the district court’s denial of Lacks’ motion for summary judgment is affirmed.

                                           III.

      In sum, we affirm in part, reverse in part, and remand. We affirm the district

court’s denial of motion for summary judgment to Lacks on validity. We reverse and

remand the district court’s grant to Defendants summary judgment of invalidity. On

remand, the district court should decide whether Defendants’ can establish by clear and

convincing evidence: (1) that any of the five documents at issue rises to the level of a

commercial offer for sale under the Group One standard; (2) if so, that the same

document was communicated to an offeree prior to the critical date; and (3) that the

subject matter of the document satisfies each and every claim limitation of any of the

Remaining Claims. We assume that the district court (or the Special Master) will apply

the correct legal standard in the further proceedings consistent with this opinion. If it

does not find the Remaining Claims invalid, the court must then determine the extent of

the damages Lacks suffered as a result of the infringement of the Remaining Claims by

Defendants.

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2008-1167