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Specific Identification in the Specification of What the Material Is and Where It Can Be Found Is Sufficient to Constitute Incorporation by Reference of That Material

August 14, 2009

Decision icon Decision

Last Month at the Federal Circuit - September 2009

Judges: Linn, Dyk (author), Prost

[Appealed from: D. Del., Judge Robinson]

In Callaway Golf Co. v. Acushnet Co., No. 09-1076 (Fed. Cir. Aug. 14, 2009), the Federal Circuit reversed the district court’s entry of SJ on anticipation and remanded; affirmed the district court’s determination that Acushnet Company (“Acushnet”) was not entitled to JMOL that the asserted claims were invalid for obviousness; but vacated the district court’s judgment on obviousness and remanded for a new trial.

Callaway Golf Company (“Callaway”) is the owner of four patents (collectively “the Sullivan patents”) that share nearly identical specifications and contain similar claims to a multilayer polyurethane-covered golf ball. Claim 1 of U.S. Patent No. 6,210,293 (“the ’293 patent”), which is generally representative of the asserted claims, recites a golf ball comprising a core, an inner cover made of a blend of low-acid ionomer resins having a Shore D hardness of 60 or more, and an outer cover layer made of a polyurethane material having a Shore D hardness of 64 or less.

Callaway sued Acushnet for patent infringement based on Acushnet’s sales of the Titleist Pro V1, Pro V1*, and Pro V1x golf balls, all of which have a core, an ionomer inner cover, and a polyurethane outer cover. The district court construed the term “cover layer having a Shore D hardness” as measured on the golf ball, not on a sample of the cover layer off the ball. Based on this claim construction, Acushnet stipulated its golf balls infringed the asserted claims. However, Acushnet argued that the Callaway patents were invalid based on anticipation and obviousness, and moved for SJ. With regard to anticipation, Acushnet argued U.S. Patent No. 4,431,193 (“Nesbitt”) disclosed a three-piece golf ball meeting all the limitations of the Sullivan claims except the polyurethane outer cover and a blend of ionomers in the inner cover. Acushnet argued that Nesbitt incorporates by reference U.S. Patent No. 4,274,637 (“Molitor ’637”), which teaches both polyurethane and ionomer blends as cover materials. Callaway filed a cross-motion for SJ, arguing that Nesbitt did not incorporate Molitor ’637.

The district court granted Callaway’s motion for SJ, holding that Nesbitt did not describe the use of polyurethane or blends of ionomer resins in Molitor ’637 “with sufficient particularity to effectuate an incorporation by reference of those features.” Slip op. at 6. With regard to obviousness, Acushnet relied on Nesbitt, Molitor ’637, and three other U.S. patents, Nos. 4,674,751 (“Molitor ’751”), 5,314,187 (“Proudfit”), and 5,334,673 (“Wu”), arguing that the various separate elements of the Sullivan patents were known in the art. A jury trial limited to the question of obviousness resulted in a verdict concluding that dependent claim 5 of the '293 patent was invalid for obviousness, but the remaining eight claims, including independent claim 4 of the ’293 patent, the antecedent claim to claim 5, had not been proven invalid. The district court denied Acushnet’s renewed motion for JMOL.

On appeal, Acushnet challenged five major aspects of the district court proceedings. First, Acushnet challenged the district court’s claim construction requiring on-the-ball measurements of hardness, citing the specification’s reference to an American Society for Testing and Materials (“ASTM”) standard that states that the hardness measurement should not be measured on a rounded or curved surface. The Court rejected Acushnet’s argument, pointing to disclosures in the specification of hardness measurements taken on intermediate and finished balls, and to testimony from an Acushnet vice president that technical people in the industry deviate from the ASTM method by measuring on the ball. The Court concluded that the district court did not err in its construction requiring on-the-ball measurement.

Second, Acushnet challenged the district court’s denial of its JMOL that the asserted Sullivan claims were obvious. Acushnet framed the invention of the Sullivan patents as nothing more than a predictable and “obvious to try” variation of known elements. Callaway argued that the construction was not present in the prior art, and “produce[s] a synergy and an important new result” over and beyond that which could be expected independently from each prior art element, namely, a true dual-personality ball that is capable of travelling great distances yet does not exhibit diminished playability or durability.

The Federal Circuit found the evidence did not compel a finding that all claim limitations were present in the prior art. The Court noted that since none of the cited references expressly recited the claimed Shore D hardness limitation on a three-piece ball, Acushnet relied on the disclosure of Molitor ’751 of a Shore C hardness on a two-piece ball as indirect evidence. But the Court found substantial evidence supported the contrary position. The jury was entitled to determine that the evidence was sufficient to undermine Acushnet’s claim that the Shore C hardness present in the prior art would necessarily translate to an on-the-ball Shore D hardness on a three-piece, two-cover ball. The Court therefore concluded that the district court did not err in concluding that substantial evidence supported the jury’s implicit resolution of the factual issue in Callaway’s favor.

Third, Acushnet challenged the exclusion of evidence in the trial on obviousness. Acushnet sought to have an expert testify about test balls assembled and tested by Acushnet’s employees to demonstrate that the Shore D hardness limitations of the asserted claims were inherently met by golf balls made through combination of the prior art. The Court held that the district court properly excluded the expert’s testimony because he had not prepared or tested the balls and could not vouch for the reliability of the tests. Next, Acushnet tried to introduce the test evidence, proffering foundational testimony from the Acushnet employee who supervised production of the test balls and delivered them to the independent laboratory for testing. But the district court excluded the evidence presumably under Fed. R. Evid. 403, as it ran a high risk of causing undue prejudice by leading the jury to give Acushnet’s obviousness argument excessive weight. The Court found that excluding the evidence here was not an abuse of discretion.

Acushnet also sought to introduce evidence of a parallel inter partes reexamination of the Sullivan patents, wherein the PTO rejected each asserted claim of the Sullivan patents based on essentially the prior art cited by Acushnet in the litigation. The Court found that the district court did not abuse its discretion in excluding the evidence, because the evidence bore little relevance to the jury’s independent deliberations on the factual issues underlying the question of obviousness, and the risk of jury confusion if the evidence was introduced was high. Fourth, Acushnet argued that it should have been granted JMOL or a new trial based on inconsistent jury verdicts. The jury ruled dependent claim 5 of the ’293 patent invalid for obviousness while finding all other asserted claims, including independent claim 4 from which claim 5 depends, not invalid. The Court noted that “[a] broader independent claim cannot be nonobvious where a dependent claim stemming from that independent claim is invalid for obviousness.” Id. at 21-22. Callaway argued that the verdict is not irreconcilably inconsistent because claim 5 of the ’293 patent lacks a “blend” limitation, whereas the other claims require the inner cover to contain a “blend” of ionomer resins, and the jury could have rationally concluded that the “blend” claims were not obvious even if claim 5, lacking a “blend” limitation, was obvious.

The Court noted that the district court’s rejection of Callaway’s theory was proper because reconciliation of inconsistent verdicts must be consistent with the evidence and theories adduced at trial. And at trial, no party asserted any patentable difference among the asserted claims before the jury or otherwise meaningfully distinguished between the claims on the basis of the “blend” limitation. However, the Court noted that the district court’s reasoning that the inconsistency was “harmless” in light of Acushnet’s stipulation of infringement was flawed. The Court cited Third Circuit law that “where a reading of the verdicts that would solve the apparent inconsistency proves impossible and the evidence might support either of the two inconsistent verdicts, ‘the appropriate remedy is ordinarily, not simply to accept one verdict and dismiss the other, but to order an entirely new trial.’” Id. at 23 (citation omitted). Accordingly, the Court vacated the judgment of the district court and remanded for a new trial on obviousness.

Finally, Acushnet argued that the district court erred in holding that Nesbitt did not incorporate Molitor ’637. The Court considered the relevant passage of Nesbitt describing the materials that may be used in the cover layers of the Nesbitt golf ball. The passage referred to Molitor ’637, which teaches that many foamable materials, including both polyurethane and ionomerresin blends, may be used as golf ball cover materials. The Court examined the disclosure in Nesbitt indicating that layers of the golf ball may be made from a “natural or synthetic polymeric material,” including all of the foamable polymeric materials described in Molitor ‘637. The Court noted that polyurethane is a foamable composition. Accordingly, the Court held that Nesbitt incorporates by reference the potential cover layer materials described in Molitor ’637, including polyurethane and ionomer-resin blends, and reversed SJ to Callaway and remanded for further proceedings. The Court noted that nothing precludes the district court from permitting Callaway to file a new motion for SJ on that issue, if the district court thinks it appropriate.

Summary authored by Sulay D. Jhaveri, Ph.D., Esq.