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No Collateral Estoppel on Claim Constructions from Previously Settled Case

02-1508
April 21, 2003
Fues, Eric J.

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Last Month at the Federal Circuit - May 2003

Judges: Michel (author), Rader, and Schall

In RF Delaware, Inc. v. Pacific Keystone Technologies, Inc., No. 02-1508 (Fed. Cir. Apr. 21, 2003), the Federal Circuit reversed the district court’s SJ rulings of noninfringement for both patents-in-suit and remanded the case for further proceedings.

RF Delaware, Inc. (“RFD”) owns U.S. Patent Nos. 5,198,124 (“the ’124 patent”) and 5,314,630 (“the ’630 patent”), which share identical written descriptions and relate to the use and washing of an “upflow filter” in combination upflow and downflow water-filtration systems. The accused infringers, Pacific Keystone Technologies, Inc.; BCA Industrial Controls Limited; Clearwater Technologies, Inc.; and Michael Morris (collectively “Pacific”) make water-filtration systems.

The central issue on appeal was whether the Alabama district court properly construed the claim terms “filter bed” of claim 1 of the ’124 patent and “first particulate filter media” of claim 1 of the ’630 patent to require a flocculation layer and a transitional layer, in addition to a filter layer. The appeal also presented the issue of what preclusive effect, if any, should be accorded the claim-construction rulings on partial SJ of an earlier Virginia district court case that involved the same patents but ended in settlement without complete adjudication.

Pacific argued on appeal that RFD was bound by the claim-construction rulings issued by the Virginia district court on motions for partial SJ in an action that RFD had brought against another party, Infilco Degremont, Inc. (“IDI”). Applying Eleventh Circuit law to the procedural issue of collateral estoppel, the Federal Circuit held that the standard for judicial finality was not satisfied. In so ruling, the Court noted that neither of the orders issued by the Virginia district court had been dispositive and the case was ready for trial on the issue of infringement when RFD and IDI settled that action. The Federal Circuit also observed that the Virginia district court’s orders granting partial SJ were not sufficiently firm to have preclusive effect. An evidentiary hearing had not been conducted to construe the claims of the ’124 and ’630 patents before the orders had issued. Indeed, the Virginia district court had not even entertained oral argument on the claims of the ’124 patent. Thus, the Federal Circuit found it questionable whether the parties had been fully heard before the Virginia district court rendered its claim-construction rulings. Additionally, the Virginia district court had not put the parties on notice that its orders could have a preclusive effect, nor had it entered a final order approving the proposed settlement between RFD and IDI.

Turning to the merits of the claim-construction rulings by the Alabama district court, the Federal Circuit held that the trial court had improperly construed the claim terms “filter bed” and “first particulate filter media” as requiring multiple layers. Specifically, the district court had erred by importing limitations from the specification into the claims of the ’124 and ’630 patents, and by importing limitations from the narrower or dependent claims of the ’124 patent into a broader independent claim.

Claim 1 of the ’124 patent teaches a method of washing an upflow filter that includes “a filter bed having a non-buoyant particulate filter media layer.” Claim 7, another independent claim, teaches a similar method that provides a filter bed “having a non-buoyant particulate media filter layer and a particulate non-buoyant static flocculation layer.” Claim 12, which depends from claim 7, also includes “a transitional layer of particulate material between the flocculation layer and the filter layer.” The specification of the patent also indicates that in “the most preferred embodiment of the invention,” the filter bed includes a flocculation layer, a transitional support layer, and a filter layer.

According to the Federal Circuit, the claim language “a filter bed having a non-buoyant particulate media filter layer” can be interpreted according to its plain and ordinary meaning because the claim does not refer to a flocculation layer or a transitional layer. The district court’s claim construction also violated the doctrine of claim differentiation because it rendered redundant or meaningless the limitations of “a flocculation layer” in claim 7 and “a transitional layer” in claim 12.

As with the ’124 patent, the Federal Circuit held that the district court had improperly imported limitations from the specification into the claims of the ’630 patent when it construed the “first particulate filter media” to require a multimedia, nonbuoyant filter bed containing multiple layers (namely, flocculation, transitional support, and filter layers). The Federal Circuit also recognized that SJ of noninfringement had been premised on the district court’s erroneous claim interpretations and, therefore, reversed that holding.

A final issue involved the question of whether Pacific, as a manufacturer and seller of watertreatment equipment, had committed any act of infringement of the claimed methods. Pacific argued that it was not a direct infringer, and that it had no knowledge of the RFD patents at the time it sold its products, so it could not be held liable for inducement of infringement or contributory infringement. Upon review of the appellate record, the Federal Circuit concluded that there were genuine issues of material fact regarding whether Pacific had tested or started up any infringing equipment, thereby committing direct acts of infringement. The Court also concluded that there were genuine issues of material fact regarding whether Pacific had sold systems knowing about the ’124 and ’630 patents and that its systems would infringe during operation. Hence, the Federal Circuit reversed the district court’s grant of SJ of noninfringement and remanded the case for further proceedings.