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Court “Molds” Infringement Finding on Lost-Foam Casting Patent

February 05, 2002

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Last Month at the Federal Circuit - March 2002

Newman (author), Lourie, and Michel (dissenting-in-part)

In Vulcan Engineering Co. v. FATA Aluminum, Inc., No. 00-1533 (Fed. Cir. Feb. 5, 2002), the Federal Circuit affirmed the district court’s holdings of validity, enforceability, and infringement, but modified the damages award and remanded for an accounting. Patent owner, Vulcan Engineering Company (“Vulcan”), sued Defendant, FATA Aluminum, Inc. (“FATA”), for infringement of U.S. Patent No. 4,736,787 (“the ‘787 patent”) directed to an automated lost-foam casting system.

“Lost foam” casting is a process used for making molded metal shapes. In lost-foam casting, molten metal is poured directly into the mold, destroying the original foam model in the process. The ‘787 patent describes and claims an automated lost-foam casting system in which gondolas bearing “mold forming flasks” move along a “closed curvilinear track means” through a series of stations at which the steps in the lost-foam casting process are performed. The district court had found that prior to the ‘787 patent, such an automated system was believed to be impracticable in the art and that when it was introduced, the patented system was acclaimed in the trade press.

The Federal Circuit affirmed the district court’s holding of nonobviousness, relying in particular on the lower court’s finding that there was no suggestion in the prior art to combine the various systems cited by FATA as well as the commercial success of the Vulcan system and the contemporaneous recognition of the achievements of that system.

FATA’s challenge to the district court’s holding of infringement centered on the interpretation of two means-plus-function claim terms. Conceding that its system performed the functions recited in the claims, FATA argued that the corresponding structures in its system were not equivalent to the corresponding structures recited in the ‘787 patent. For example, with regard to the “means for registering said flask thereon for alignment,” FATA noted that the patent recited a receptacle on the gondola and two corresponding posts on the flask, whereas in FATA’s system, the receptacle was on the flask and the corresponding posts were on the gondola. The Federal Circuit affirmed the district court’s holding that these two structures were essentially interchangeable and, therefore, equivalent.

Vulcan and FATA had both bid for a contract to make lost-foam casting lines for General Motors (“GM”). FATA won the bidding, and Vulcan sent warning letters to GM and FATA, indicating that the contracted lines would likely infringe Vulcan’s patent. FATA, however, continued production of the casting lines. At the time of the lawsuit, FATA had delivered one line and was in the process of installing four others. After the district court announced its holding on liability, but before any trial on damages, Vulcan entered a license agreement with GM, agreeing not to sue for use of the completed casting system and granting GM a limited license to have FATA complete work on the remaining four systems. The license agreement explicitly stated the parties’ intention that Vulcan was not waiving any claim it might have against FATA for lost business relating to the five casting lines.

The district court awarded lost-profits damages for the completed first casting line, but refused to grant price-erosion damages because Vulcan did not know at the time of the bidding that the FATA system infringed the patent. The Federal Circuit held that such knowledge of infringement was not necessary, provided that Vulcan was aware of FATA as a competitor and had reduced its price in response to such competition. Lacking specific findings on those issues by the district court, the Federal Circuit remanded for a recalculation of damages arising from FATA’s sale of the first casting line. Judge Michel dissented from this ruling, disagreeing that the district court had applied an erroneous standard requiring Vulcan to have actual knowledge that FATA’s bid was infringing. Instead, he opined that the district court had simply found no credible evidence that Vulcan had shaped its bid in response to FATA’s.

For the remaining four casting lines, the Court agreed that Vulcan was not entitled to damages from FATA since it had licensed GM to have the lines made. Judge Michel dissented from this ruling as well, concluding that the license agreement between Vulcan and GM did not serve to preclude a claim of damages against FATA because the agreement did not purport to compensate FATA for lines 2-5 but only provided Vulcan with a license to make five additional casting lines.

On the issue of willfulness, the Federal Circuit, characterizing the issue as “close,” agreed that FATA’s infringement was not willful even though FATA had been aware of the ‘787 patent for years and did not obtain advice of counsel until after it had submitted its infringing bid and received notice from Vulcan.

Finally, the Federal Circuit affirmed the district court’s denial of FATA’s request for a new trial to allow it to submit additional evidence of invalidity. The Court noted that regardless of whether FATA’s motion was timely, the proffered prior art evidence was similar to other evidence FATA had presented at trial and the newly cited patents had been publicly available at the time of the trial.