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SJ of Infringement of a Patented Method Is Inappropriate Where Plaintiff Offers No Evidence of Actual Use of the Method

August 15, 2012
Smyth, Jeffrey D.

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Last Month at the Federal Circuit - September 2012

Judges: Dyk (concurring), Moore, O'Malley (author)

[Appealed from: N.D. Ill., Judge Shadur]

In Meyer Intellectual Properties Ltd. v. Bodum, Inc., No. 11-1329 (Fed. Cir. Aug. 15, 2012), the Federal Circuit reversed the district court’s grant of SJ of infringement, vacated the jury’s verdict due to abuse of discretion by the district court in granting certain evidentiary motions, vacated an award of attorneys’ fees, and remanded the case to the district court for further proceedings.

Meyer Intellectual Properties Limited and Meyer Corporation, U.S. (collectively “Meyer”) own two patents directed to a method of frothing liquids, U.S. Patent Nos. 5,780,087 (“the ’087 patent”) and 5,939,122 (“the ’122 patent”), which is a continuation of the ’087 patent. Both patents cover a method for frothing liquids such as milk without using electricity or steam. Generally, the steps include (1) providing a container that has a height to diameter aspect ratio of 2:1; (2) pouring liquid into the container; (3) introducing a plunger with certain features; and (4) pumping the plunger to aerate the liquid. Meyer accused three versions of Bodum, Inc.’s (“Bodum”) milk frothers of infringement. Bodum counterclaimed for DJ of noninfringement and invalidity. The parties did not ask the district court to construe the phrase “providing a container,” as it is used in the claims.

Before trial, Meyer filed two motions for partial SJ, arguing that all three versions of the Bodum product infringed the ’087 and ’122 patents both directly and indirectly. Specifically, Meyer argued that, by including instructions for use along with the products it sold, Bodum induced others to infringe Meyer’s patents. Meyer supported its motion with expert testimony, although it did not present any evidence that Bodum or any of its customers actually performed the patented method. The district court granted SJ of infringement with regard to two of the three versions of Bodum’s milk-frothing product.

Meyer also filed several motions in limine seeking to (1) prevent Bodum from introducing what it characterized as previously undisclosed prior art references; (2) prevent Bodum’s expert from testifying regarding invalidity and obviousness; (3) prevent Bodum’s other witnesses from presenting testimony related to prior art not discussed by its expert; and (4) preclude Bodum from presenting evidence of inequitable conduct. The district court granted all of Meyer’s motions, effectively limiting Bodum to use of only two prior art references identified in its expert report.

The jury returned a verdict in favor of Meyer, finding that the patents were not invalid, Bodum’s infringement was willful, and Meyer was entitled to $50,000 in damages. Ruling on post-trial motions, the district court awarded Meyer treble damages as well as attorneys’ fees of approximately $750,000. The district court also denied Bodum’s renewed JMOL and motion to alter the SJ decision.

On appeal, the Federal Circuit considered whether the district court erred when it (1) granted SJ of direct infringement and inducement of the asserted method claims, despite the lack of evidence that any one party—including Bodum—actually performed each step of the asserted claims; (2) made several evidentiary rulings that made it impossible for Bodum to present its case; (3) dismissed Bodum’s affirmative defense of inequitable conduct on a motion in limine; and (4) denied Bodum’s JMOL of no willful infringement.

The Federal Circuit first addressed whether the district court appropriately granted SJ on the issue of infringement. The Court disagreed with the district court that Bodum had conceded direct infringement and concluded that no waiver occurred. Rather, Bodum argued during SJ proceedings that it could not be liable for direct infringement because, based on Bodum’s interpretation of the term “providing,” one party could not infringe any of the method claims. Because Bodum challenged the direct infringement claim, the Federal Circuit found that Bodum did not concede the issue. There was no other evidence to support SJ of infringement as to those products, so the Court concluded that SJ was not appropriate.

Next, the Court construed the term “providing,” a term not construed by the district court. In so doing, the Court noted that it is generally hesitant to construe terms that have not been construed by the lower court, but in this case where both parties had sufficiently developed their positions on the record, construing the term was appropriate. The Court concluded that the term was not limited to a specific party, as Bodum had contended, but rather that anyone who takes a Bodum device from the kitchen cabinet can satisfy the “providing” step. By not limiting the “providing” step, the Court found that it would be possible for a single party to infringe the claimed method.

Despite ruling in Meyer’s favor on the claim construction issue, the Federal Circuit reversed the district court’s grant of SJ because there was no record evidence of direct infringement by either Bodum or any of its customers. The district court had assumed that Bodum “must have tested” its products before releasing them, despite the fact that no evidence demonstrated such testing. The Court held that this assumption contradicted the well-established law that the burden is on the patentee to prove infringement by a preponderance of the evidence. The assumption that testing must have occurred improperly drew an inference in favor of Meyer, the party that moved for SJ. Because all factual inferences must be drawn in favor of the nonmoving party, the Federal Circuit reversed the grant of SJ and remanded the case for further consideration in light of the construction of the term “providing.”

The Federal Circuit next addressed and reversed several evidentiary rulings made by the district court, applying the law of the Seventh Circuit. First was the district court’s decision to limit the universe of prior art based upon (1) Bodum’s insufficient disclosure in an interrogatory response; and (2) the scope of references addressed in the report of its expert. In reviewing the record, the Federal Circuit determined that the interrogatory response did disclose several references that were excluded by the district court. The Court also found that the scope of the expert report was not narrowed to two references as the district court had found and that, even if the expert report had narrowed the scope of prior art, such narrowing should have only impacted the scope of the expert’s testimony. The Court ultimately found that the improperly narrowed scope of prior art prevented Bodum from presenting its invalidity defense, and thus remanded for a new trial on obviousness.

The Court turned next to the district court’s exclusion of Bodum’s expert testimony as a conclusory opinion. The Court acknowledged that an expert merely listing prior art references and concluding that “one skilled in the art would find the patent obvious” is deficient under Fed. R. Civ. P. 26. The Court, however, found upon a careful review of Bodum’s expert report that the expert had provided a sufficiently detailed statement of opinions and bases for his conclusions, particularly in light of the simplicity of the invention in this case. The expert invoked the common sense of one skilled in the art as evidence of motivation to combine prior art references. The Court reminded that “the common sense of one skilled in the art can play a role in the obviousness analysis,” and here found that “the technology involved is simple and common sense would motivate one of skill in the art to make the combination . . . .” Slip op. at 37. Because the district court’s ruling effectively prevented Bodum from presenting an obviousness defense, the Court remanded for a new trial on obviousness.

The Federal Circuit also disagreed with the district court’s exclusion of testimony by a lay witness related to a prior art reference. Bodum sought to introduce testimony of its CEO regarding when a prior art device was first sold. The district court, having ruled that Bodum was limited to the two prior art references discussed in its expert’s report, excluded the testimony, seeing it as an attempt to introduce prior art through the “back door.” The Court found this exclusion to be an error, noting that it saw no problem with having the CEO testify to factual matters within his personal knowledge if those facts are supported by corroborating documentation, as they were in this case. The Court held that the CEO should be allowed to testify to such facts on remand.

The Federal Circuit addressed the district court’s exclusion of evidence in support of Bodum’s inequitable conduct defense. In ruling on Meyer’s motion in limine, the district court found that Bodum failed to meet the “demanding requirements” to prove inequitable conduct, and thus would not be allowed to present evidence in support of the affirmative defense at trial. On appeal, Bodum argued that the district court erred in addressing the sufficiency of the evidence in the context of an evidentiary motion, essentially converting it to an issuance of SJ on inequitable conduct. The Federal Circuit agreed that the district court’s action was procedurally improper, reversed the ruling, and remanded the issue for further proceedings.

Finally, the Federal Circuit considered the jury’s finding of willfulness. In light of its decision to remand the case for further proceedings on infringement and invalidity, the Court also vacated the jury’s finding of willfulness. The Federal Circuit also vacated the post-trial award of treble damages and attorneys’ fees, finding that these fees were based on the willfulness finding and evidentiary rulings, both of which were reversed.

Judge Dyk concurred with and joined the majority opinion, but wrote separately to explain why “this case is an example of what is wrong with our patent system.” Dyk Concurrence at 1. Judge Dyk believed that the ’087 and ’122 patents should have been rejected as obvious by the PTO or found obvious on SJ by the district court. In Judge Dyk’s view, this “wasteful litigation does not serve the interests of the inventorship community, nor does it fulfill the purposes of the patent system.” Id. at 2.

Summary authored by Jeffrey D. Smyth, Esq.