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Court Addresses Declaratory Judgment Counterclaims Even After Finding Noninfringement

05-1123
May 09, 2006

Decision icon Decision

Last Month at the Federal Circuit - June 2006

Judges: Mayer (dissenting), Schall, Linn
(author)

In Old Town Canoe Co. v. Confluence Holdings Corp., Nos. 05-1123, -1148 (Fed. Cir. May 9, 2006), the Federal Circuit affirmed the district court’s grant of JMOL of noninfringement, but vacated the district court’s grant of JMOL of no invalidity based on obviousness, lack of enablement, and failure to disclose best mode. The Federal Circuit affirmed the district court’s grant of JMOL of no inequitable conduct.

Old Town Canoe Company (“Old Town”) is the assignee of U.S. Patent No. 4,836,963 (“the ’963 patent”), directed to a method of making multilayered plastic laminate boat hulls by rotational molding. The ’963 patent describes a method of releasing charges of laminate into a heated mold. Each charge melts and flows together to form a cross-linked plastic layer. A successive charge is not released until the layer formed by the prior charge has reached an appropriate stage.

Old Town sued Confluence Holdings Corporation (“Confluence”) for infringement of the ’963 patent. Confluence filed a DJ counterclaim of invalidity and unenforceability. After five days of trial, the district court granted Confluence’s motion for JMOL of noninfringement. The district court then granted Old Town’s motion for JMOL of no invalidity, concluding that there was not sufficient evidence to meet the clear and convincing standard to overcome the presumption of validity. The district court also granted Old Town’s motion for JMOL of no unenforceability based on inequitable conduct.

On appeal, the Federal Circuit affirmed the holding of no literal infringement because the Confluence canoes did not reach the claimed optimum stage of coalescence. The Court also held that prosecution history estoppel precluded Old Town from asserting the DOE. The Court also rejected Old Town’s alternative claim construction argument, holding that the district court’s reference to the dictionary at the beginning of its claim construction analysis was not an improper attempt to find meaning divorced from the context of the intrinsic record, but was a starting point in its analysis, which centered on the intrinsic record.

The Federal Circuit therefore held that the district court’s construction of completion to coalescence was correct and excludes a process that fails to reach the claimed optimum stage. The Federal Circuit next addressed Confluence’s cross-appeal of the district court’s grant of Old Town’s JMOL motions that the ’963 patent was not invalid and not unenforceable. At oral argument, the Court asked whether it would be necessary for the Court to address the issues raised in the cross-appeal if the Court were to affirm the appeal. Apparently, Confluence’s counsel stopped short of agreeing to dismiss the cross-appeal without a vacatur of the judgment with respect to the invalidity and unenforceability motion. The Federal Circuit found that the affirmance of the noninfringement issues does not moot the invalidity and unenforceability issues, and that therefore, the Court was required to address the merits of the cross-appeal, citing Cardinal Chemical Co. v. Morton International, Inc., 508 U.S. 83 (1993).

The Federal Circuit held that Confluence had introduced clear and convincing evidence that the prior art references disclosed every element of the asserted claims and that there was sufficient motivation to combine, and thereby vacated the district court’s grant of JMOL of no invalidity for obviousness. The Federal Circuit also held that Confluence had introduced clear and convincing evidence that persons of ordinary skill in the art would require repeated experimental attempts to practice the invention and therefore vacated the district court’s grant of JMOL on the issue of enablement. The Federal Circuit also held that evidence suggests that Old Town did not disclose the details of the best mode of the invention, in particular, optimal timing periods for coalescence and a way to construct cooling doors to permit improved cooling, both of which were described in a document given to Old Town’s patent lawyer but not disclosed in the specification. The Federal Circuit therefore vacated the district court’s grant of JMOL on the ground of no best mode violation.

On inequitable conduct, Confluence had argued that Old Town sold 500 canoes that would be material to the patentability of the ’963 patent and that the Court should infer intent to deceive the PTO due to their failure to disclose this sale.

Alternatively, Confluence argued that inequitable conduct could lay independently due to Old Town’s failure to disclose best mode. The Federal Circuit found that there was evidence that the 500 canoes were material and also that the failure to disclose best mode may be relevant to materiality. The Court, however, found no evidence of intent to deceive the PTO, which must be separately proven. The Federal Circuit therefore affirmed the district court’s grant of JMOL of no inequitable conduct.

In dissent, Judge Mayer agreed with the majority’s noninfringement decision, but believed there was no longer an actual controversy over the invalidity and unenforceability counterclaims to support DJ jurisdiction. According to the dissent, Confluence no longer had any reasonable apprehension of suit after the noninfringement ruling, and addressing the merits of the cross-appeal and remanding for further proceedings are wasteful and advisory. Thus, the dissent urged that the proper course was to dismiss the cross-appeal and vacate the trial court’s judgment on invalidity and unenforceability.