No Form of Words Is Necessary to Evince the Rendition of a Judgment
February 21, 2003
Last Month at the Federal Circuit - March 2003
Judges: Dyk (author), Plager, and Clevenger
In Pandrol USA, LP v. Airboss Railway Products, Inc., No. 02-1067 (Fed. Cir. Feb. 21, 2003), the Federal Circuit affirmed the district court’s claim construction and grant of SJ of infringement of claim 3 of U.S. Patent No. 5,110,046 (“the ‘046 patent”), reversed the district court’s ruling that the Defendants waived their affirmative defenses of invalidity, vacated the district court’s award of damages and an injunction, and remanded for further proceedings.
Plaintiff, Pandrol Ltd., is the owner of the ‘046 patent, and Plaintiff, Pandrol USA, LP, is an exclusive licensee of the ‘046 patent. The ’046 patent relates to a railroad-track fastening system and is directed to a rail-seat assembly that interposes an abrasion-resistant plate and a layer of adhering material between the rail pad and the rail to reduce corrosion.
Pandrol Ltd. alleged that Defendant, Airboss Railway Products, Inc.’s three-piece railroad-track fastening system directly infringed the ‘046 patent and that Defendants, Airboss of America Corporation (parent company) and Robert M. Magnuson (company President) and Jose R. Mediavilla (company Vice President) induced infringement. The Defendants denied infringement, raised affirmative defenses, including patent invalidity, and filed counterclaims for a DJ that the ’046 patent was invalid.
The district court construed the phrase “adhering material” in claims 1 and 3 of the ‘046 patent to be a layer of adhesive that bonds the plate to the tie and granted the Defendants’ motion for SJ of noninfringement of the ’046 patent. In a previous appeal, the Federal Circuit held that the district court had erroneously construed the “adhering material” recitation, stating that “bonding” was not necessary for adhering, and reversed and remanded.
On remand, the Defendants filed a motion for SJ of noninfringement but did not raise their affirmative defenses or counterclaims of invalidity and did not contest the Plaintiffs’ title to the patent. Defendants, Magnuson and Mediavilla, also moved for SJ dismissing them as Defendants. Plaintiffs filed a crossmotion for SJ of infringement as to claim 3 but did not request SJ of liability or seek SJ as to the affirmative defenses and counterclaims of invalidity previously asserted by the Defendants.
The district court granted the Plaintiffs’ motion for SJ of infringement as to claim 3 and denied the Defendants’ motions for SJ. In construing the meaning of the phrase “adhering material,” the district court found that the term must include a closed cell-foam pad and that, as a result, “adhering” must include at least the type of adherence that results from the combined use of a metal-abrasion plate, polyethylene-foam pad, and concrete tie under a railroad rail. The Court also denied Defendants Magnuson and Mediavilla’s motion for SJ dismissing them as Defendants.
The Defendants subsequently argued that they were entitled to try the issues of patent invalidity, ownership, and the liability of the individual Defendants. The district court found that the Defendants had waived their defenses by failing to raise them in opposition to the Plaintiffs’ motion for SJ of infringement and limited the trial to the issue of damages. A jury awarded the Plaintiffs lost-profits damages and the district court entered a final injunction against the Defendants.
The Federal Circuit began its review by establishing its jurisdiction over the appeal. Since the parties had stipulated to a dismissal of the Defendants’ counterclaims without prejudice to the Defendants’ right to assert all defenses, the Court found that an appealable final judgment had been entered.
The Defendants appealed the construction of claim 3 with regard to the “adhering material” limitation. The Federal Circuit found that the district court’s claim construction was correct and, therefore, the Plaintiffs were entitled to SJ of infringement as a matter of law.
The Defendants also appealed the district court’s ruling that they had waived the right to a trial on the issue of invalidity by failing to raise it in opposition to the cross-motion for SJ as to the issue of infringement. The Federal Circuit stated that patent infringement and patent validity are treated as separate and distinct issues and that an alleged infringer’s failure to raise invalidity in opposition to a motion for SJ of infringement is not a waiver. The Federal Circuit held, therefore, that the case must be remanded to allow the Defendants to try their invalidity defense and counterclaim.
The Defendants also appealed the district court’s ruling that they were not entitled to a trial on the lack of responsibility of one or more of the Defendants. The Federal Circuit stated that while the alleged nonliability of the secondary Defendants is not an affirmative defense, failure to raise the issue in opposition to the Plaintiffs’ motion for SJ did result in waiver. The Federal Circuit reasoned that the Plaintiffs’ motion for SJ specifically sought a finding of infringement as to all Defendants and, thus, the individual Defendants were obligated to oppose this motion with their arguments as to the secondary Defendants’ nonliability for infringement.
The Federal Circuit also held that the Defendants waived the right to contest the Plaintiffs’ title to the patent, insofar as lack of ownership is viewed as a defense to the claim of infringement. The Federal Circuit stated that when the Plaintiffs moved for SJ of infringement, they implicitly asserted ownership of the patent. Thus, the Federal Circuit held that it was incumbent upon the Defendants to raise the issue of lack of patent ownership in their opposition to the motion for SJ of infringement and that the Defendants’ failure to do so constituted a waiver of that issue as a defense.
The Federal Circuit sua sponte raised the issue of standing, stating that Defendants’ waiver of the defense of lack of patent ownership did not preclude their ability to challenge the Plaintiffs’ standing to sue under Article III of the Constitution. The Court concluded, however, that the record on appeal contained sufficient evidence to support the Plaintiffs’ standing.
The Federal Circuit also addressed the issue of damages, holding that the jury instructions were sufficient and that the judgment may be reinstated if the issue of patent validity is resolved in Plaintiffs’ favor.