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In an ITC Action, the Federal Circuit Need Not Address Validity if Noninfringement Is Affirmed

May 07, 2008

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Last Month at the Federal Circuit - June 2008

Judges: Lourie, Rader, Bryson (author)

[Appealed from: ITC]

In Solomon Technologies, Inc. v. International Trade Commission, No. 07-1391 (Fed. Cir. May 7, 2008), the Federal Circuit affirmed the ITC, finding that the accused products did not practice two limitations of the patent at issue.

Solomon Technologies, Inc. (“Solomon”) filed a complaint with the ITC under section 337 of the Tarriff Act of 1930, alleging that the intervenors, Toyota Motor Corporation and its corporate affiliates(collectively “Toyota”), imported and sold hybrid vehicles that infringed claim 7 of U.S. Patent No. 5,067,932 (“the ’932 patent”). The ’932 patent teaches a combination motor and transmission device having two power inputs.

Following an investigation, the ALJ found no violation, determining that (1) the accused vehicles did not infringe the ’932 patent, (2) the ’932 patent was invalid for lack of enablement, and (3) the domestic industry requirement was not established. The ITC reviewed in part the ALJ’s initial determinations and took no position on the ALJ’s findings concerning the economic prong of the domestic industry requirement. Because the ITC declined to review the ALJ’s initial determinations in all other respects, the ALJ’s initial determination became the final determination of the ITC. Accordingly, the ITC terminated the investigation.

On appeal, Solomon challenged the ALJ’s constructions of three claim terms: “integral combination,” “within an envelope,” and “continuously variable.” Solomon conceded that, under the ALJ’s constructions, the Toyota vehicles did not infringe the ’932 patent. Solomon also argued that the ITC applied an impermissible element-by-element analysis to determine that the Toyota vehicles did not use a “power conversion means” that was equivalent to the structure disclosed in the ’932 patent.

The Federal Circuit noted that claim 7 covers devices that have an “integral combination of a respective electric motor element and an element of said transmission unit.” The ALJ had construed that limitation to require “an electric motor element and a transmission unit element rigidly and directly attached without the presence of shafts, bearings or other components between the electric motor element and the transmission unit element, supportable by a single bearing.” Slip op. at 4. The Federal Circuit found that the “prosecution history could not be clearer in showing a disclaimer of devices that use shafts to connect the motor and transmission elements.” Id. at 5. Accordingly, the Court affirmed the ALJ’s finding that the patentee disclaimed devices such as the Toyota transaxles, which use rotor shafts between their motor element and their transmission element.

The Court disagreed, however, with the ALJ’s finding that the Toyota transaxles were not “supportable by a single bearing” because of the fact that they are supported by two bearings. The Court stated, “A device could be ‘supportable’ by one bearing even though it is actually supported by more than one bearing.” Id. at 7. Nevertheless, the Court found the presence of the rotor shafts in the Toyota vehicles sufficient to support the ALJ’s determination of noninfringement of the “integral combination” limitation. 

The Court next addressed the ALJ’s finding that the Toyota transaxles did not satisfy the “within an envelope” limitation of claim 7. The ALJ construed that limitation to mean that “one of the integral combination elements is contained entirely or nearly entirely within the imaginary space defined by the rotation of the other integral combination element so that power is taken off from inside the armature itself.” Id. at 8. Solomon argued that the ALJ’s construction was too narrow and suggested that the construction should merely require the armature elements and the transmission gears to have a “close geometrical overlap.”

The Court found that the ALJ’s construction was unduly restrictive and should have omitted the words “so that power is taken off from inside the armature itself.” Id. at 10-11. Because Toyota’s transaxles had transmission gears outside the imaginary space defined by the motors’ magnet assemblies, the Court affirmed the finding of noninfringement despite the ALJ’s error.

Solomon next challenged the ALJ’s finding that the accused devices did not satisfy the “power conversion means” limitation. The ALJ found a substantial difference in structure between the Toyota transaxles and the devices described in the ’932 patent, having focused on the Toyota transaxles’ use of rotor shafts instead of disks to connect the motor elements to the transmission elements. Solomon argued that the ALJ had thereby performed an impermissible component-by-component analysis in comparing the accused devices with the structure described in the specification.

The Court stated that “our case law allows for greater weight to be given to individual components that play a central role in the identified structure.” Id. at 11. In response to a prior art rejection, the Court noted, the patentee described the importance of the disk’s role in reference to the “integral combination” limitation. Moreover, the Court highlighted how every embodiment disclosed in the ’932 patent shows the disk connecting the armature to a gear element. Because the prosecution history showed that the patentee relied on that advantage of a disk over a shaft in order to overcome the prior art, the Court found no error in the ALJ’s finding that, based on the use of rotor shafts rather than disks, the Toyota transaxles were not structurally equivalent to the structure disclosed in the specification of the ’932 patent.

Solomon also appealed the ALJ’s finding that Toyota’s transaxles did not provide rotational output speed that is “continuously variable.” After a thorough discussion of the relevant technology, the Court determined that Toyota’s construction, adopted by the ALJ, was overly narrow, while Solomon’s construction was overly broad. Thus, the Court did not uphold the finding of noninfringement based on the “continuously variable” limitation. Nonetheless, the Court affirmed the ALJ’s overall finding of noninfringement based on each of the other limitations addressed in the appeal.

The ALJ’s construction of the “continuously variable” limitation also formed the basis for a finding that the ’932 patent was invalid for lack of enablement. The Court found that it need not address this issue based on a difference between the nature of invalidity claims in the district court and the ITC. In district court cases in which invalidity is asserted as a counterclaim, the question of validity does not become moot when there has been a determination of noninfringement. Thus, the district court, and the Federal Circuit on appeal, must address the counterclaim even if noninfringement is found. When invalidity is raised as an affirmative defense, however, the reviewing court need not address validity.

The Court explained that before the ITC, invalidity is not a separate claim, but rather simply one ground for determining that the importation and sale of allegedly infringing articles do not infringe a valid and enforceable patent. The final determination from the ITC is merely a finding that section 337 has, or has not, been violated. The Court thus found that it could uphold an ITC determination without addressing every possible ground on which the order might be sustained.

With that, the Court declined to decide the enablement issue or to remand the case to determine whether claim 7 was enabled under a proper construction of the “continuously variable” limitation. The Court also declined to address the ITC’s determination with respect to the technical prong of the domestic industry requirement, a finding similarly based on the ALJ’s construction of the “continuously variable” limitation.