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Retailer’s Failure to Take Appropriate Action Leads to Willful Infringement

January 20, 2004

Decision icon Decision

Last Month at the Federal Circuit - February 2004

Judges: Prost (author), Schall, and Archer (dissenting-in-part)

In Golight, Inc. v. Wal-Mart Stores, Inc., No. 02-1608 (Fed. Cir. Jan. 20, 2004), the Federal Circuit affirmed a judgment against Wal-Mart Stores, Inc. (“Wal-Mart”) that it infringed U.S. Patent No. 5,673,989 (“the ’989 patent”) owned by Golight, Inc. (“Golight”) after finding no error in the district court’s claim construction.

The ‘989 patent is for a wireless, remote-controlled, portable search light. The only claim-construction dispute involved the claim limitation “horizontal drive means for rotating said lamp unit in a horizontal direction.” The infringement question turned on whether this limitation requires that the search light be capable of rotating through 360º, because the accused product was not.

Wal-Mart argued that the patentees acted as their own lexicographers, giving the term “rotating” a special definition during prosecution. Wal-Mart relied on a statement in the prosecution history to overcome the prior art that “the claims in issue have been amended to recite rotation through at least 360º.” Wal-Mart argued that by repeatedly stating that the invention was different from the prior art because it rotated through 360º, the patentees unequivocally disavowed any other meaning of “rotate.” The Federal Circuit reasoned that these statements could be understood as applying only to claims that explicitly recited rotation “through greater than 360º” but not to the claim in question. Thus, the prosecution history does not provide a clear and unmistakable departure from the ordinary meaning of “rotating” or a clear disavowal of claim scope.

Wal-Mart also argued that the only “horizontal drive means” disclosed by the ’989 patent, under a 35 U.S.C. § 112, ¶ 6 analysis, is one that rotates through 360º. The Federal Circuit determined that while the only embodiment in the ’989 patent is capable of rotating through 360º, there is nothing in the written description that compels limiting the function to rotation through any particular angle. Moreover, the Court reasoned, to the extent the patent contains structures for permitting rotation through 360º, these structures are superfluous because they are not required for performing the claimed “rotate” function.

As a result, the Federal Circuit gave “rotating” its ordinary meaning and included in the corresponding structure only the structure necessary to cause rotation, but not through any particular angle. Wal-Mart did not dispute that it infringed claim 11 under this claim construction and, therefore, the Federal Circuit affirmed the district court’s holding of infringement.

Wal-Mart next argued that the combination of three prior-art references and obviousness-type double patenting—two arguments already considered by the Examiner during prosecution—invalidated the ’989 patent. Wal-Mart failed, in the Federal Circuit’s opinion, to provide evidence of any motivation to combine the three references. Further, during prosecution, the patentees filed a terminal disclaimer to overcome the same obviousness-type double-patenting issue in view of an earlier patent. Because the earlier patent is not prior art and because the Federal Circuit refused to infer from the terminal disclaimer that the patentees conceded that they could not obtain anynew claim unless it contained a 360º limitation, the Court rejected Wal-Mart’s arguments. Thus, the Federal Circuit affirmed the district court’s decision that the ’989 patent was not invalid.

Concerning damages, Wal-Mart argued that the royalty determined by the district court was unreasonable as a matter of law because it would have left Wal- Mart selling the accused product below cost. No rule states that a royalty be less than the infringer’s net profit margin, the Federal Circuit reasoned, and Wal-Mart presented no evidence suggesting that the royalty determined was clearly erroneous. Thus, the Federal Circuit affirmed the district court’s reasonable royalty findings.

The district court determined that Wal- Mart willfully infringed because it failed to take any action after receiving a cease and desist letter. Wal-Mart argued that it obtained a letter from the manufacturer assuring that its products did not infringe. This letter was not admitted into evidence at trial, however, and the district court found that it was “crudely drafted” and “cursory.” The Federal Circuit determined that, based on the evidence before the district court, it was not clearly erroneous for the district court to have found willful infringement. The Federal Circuit further affirmed the district court’s award of attorney’s fees because willfulness is a sufficient basis for finding a case exceptional and awarding attorney’s fees.

Judge Archer dissented, arguing that the specification only describes a single structure, one that shows rotation only through 360º. Further, Judge Archer argued that the prosecution history and other statements in the specification fully support requiring rotation through 360º. Thus, he would have reversed the finding of infringement.