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Claim Preamble Limitation “Reverses” Infringement Finding on Gear Shift Patent

March 27, 2003

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Last Month at the Federal Circuit - April 2003

Judges: Prost (author), Newman, and Dyk

In Eaton Corp. v. Rockwell International Corp., No. 01-1633 (Fed. Cir. Mar. 27, 2003), the Federal Circuit reversed a jury’s finding of infringement, vacated entry of a permanent injunction, affirmed a judgment of no invalidity, and affirmed a judgment of no inequitable conduct.

Eaton Corporation (“Eaton”) owns U.S. Patent No. 4,850,236 (“the ’236 patent”) relating to a vehicle transmission shift control system for automatically shifting between a group of gears provided by the transmission. Eaton’s automatic shifting method is aimed at optimizing highway fuel economy.

Eaton sued Rockwell International Corporation and Meritor Automotive Incorporated (collectively “Meritor”) for infringement of the ’236 patent. To operate Meritor’s transmission, the driver, after determining when to shift, pushes a switch and moves a lever to change gears. Thus, Meritor’s system allows the driver to selectively control which gear the vehicle is in at any time.

In defense, Meritor counterclaimed for a DJ that the ’236 patent was invalid based on obviousness, lack of enablement, failure to disclose the best mode, derivation, and anticipation. Additionally, Meritor alleged inequitable conduct on the part of the inventor, Eugene Braun, and the attorney who prosecuted the ’236 patent, for intentionally failing to disclose two other transmission systems to the PTO.

In construing the only independent claim at issue, the district court ruled that the claim’s preamble was not a limitation and, furthermore, that the claim language did not require automatic shifting. In light of this construction, the jury returned a verdict that Meritor literally infringed theclaim and the court issued a permanent injunction against Meritor. Additionally, the jury found that the ’236 patent was not invalid, and the district court found no inequitable conduct.

On appeal, the Federal Circuit reversed the judgment of infringement. In particular, the Court disagreed with the district court’s claim construction, holding that the preamble did, in fact, limit the independent claim. The Federal Circuit explained that the preamble limits the claimed invention if it recites essential structure or steps, or if it is necessary to give life, meaning, and vitality to the claim. As applied to this case, the Federal Circuit ruled that the independent claim, when properly construed, requires an “automatic mechanical vehicle driveline system” that includes, among other things, “an information processing unit” for processing signals in accordance with a program for causing the engagement of gear ratio combinations. The Federal Circuit noted that according to Meritor’s system, the engagement of gear ratio combinations does not occur automatically as a result of a program running on an “information processing unit.” Meritor’s system, therefore, did not infringe.

Meritor also argued that if the asserted claims are as broad as the district court found, then the claims are anticipated by the other, nondisclosed systems. Because the Federal Circuit narrowed the district court’s claim construction, however, it rejected Meritor’s argument that the narrower claims could be anticipated. Meritor alternatively argued that if the Federal Circuit rejected the district court’s claim construction, Meritor was entitled to a new trial on the invalidity and unenforceability issues. The Federal Circuit disagreed, concluding that the mere fact that a new claim construction has been adopted on appeal is insufficient, in and of itself, to require a new trial.

Meritor also argued that Braun had derived the claimed invention from Dean Anderson of Cummins Engine Company and, as such, was not entitled to the patent under 35 U.S.C. § 102(f). The Federal Circuit, however, agreed with the district court that the balance of the evidence indicated that any disclosure from Anderson to Braun was not in sufficient detail to disclose and enable the complete invention claimed by the ’236 patent. Thus, the Federal Circuit affirmed the district court’s denial of Meritor’s motion for a new trial on the issue of derivation.

Finally, the Federal Circuit affirmed the district court’s judgment of no inequitable conduct on the part of Braun and his patent attorney. Meritor argued that the evidence showed that Braun and Eaton knew about the other prior art systems and believed them to be highly material. In affirming the district court’s judgment of no inequitable conduct, the Federal Circuit was not persuaded that the district court abused its discretion in finding that Eaton presented credible evidence of good faith during prosecution of the ’236 patent.