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Judgment of No Direct Infringement Reversed in Part Due to Application of Disclaimer Inconsistent with Claim Construction Order

September 16, 2009

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Last Month at the Federal Circuit - October 2009

Judges: Prost (author), Gajarsa, Bryson (concurring-in-part and dissenting-in-part)

[Appealed from: N.D. Ohio, Judge Gaughan]

In Vita-Mix Corp. v. Basic Holding, Inc., Nos. 08-1479, -1517 (Fed. Cir. Sept. 16, 2009), the Federal Circuit vacated and remanded the district court’s judgment of no direct infringement and affirmed the judgment of no contributory infringement, no inducement of infringement, and no trademark infringement. The Court vacated and remanded the judgment of invalidity based on anticipation, obviousness, or lack of enablement. The Court also affirmed the judgment of no inequitable conduct and no laches.

Vita-Mix Corporation (“Vita-Mix”) is the assignee of U.S. Patent No. 5,302,021 (“the ’021 patent”). The sole claim of the ’021 patent is directed to a method of preventing the formation of air pockets around the moving blades of a consumer food blender. The method involves inserting a plunger into the body of the blender to block the air channel that creates air pockets when ingredients are blended.

In 2006, Vita-Mix sued Basic Holding, Inc. (“Basic”) and affiliated companies. Vita-Mix alleged infringement of the ’021 patent by dozens of Basic’s blender models and trademark infringement by the Blender Solutions™ 5000 model. Basic responded by filing DJ counterclaims of noninfringement, invalidity, and inequitable conduct. The district court resolved on SJ the entire dispute between the parties. Vita-Mix appealed on the issues of patent and trademark infringement. Basic cross-appealed on the issues of no invalidity, inequitable conduct, and laches.

On appeal, Vita-Mix contended that the district court erred in finding no direct infringement based, in part, on applying to the accused device a claim construction inconsistent with its claim construction order. The district court determined during claim construction that Vita-Mix expressly disclaimed any stirring operation that breaks up or dislodges air pockets after they have begun to form, and that Vita-Mix limited the scope of the claimed invention to positioning the plunger such that it prevents air pockets from forming. The prior art disclosed blenders with structurally similar stirring wands that were used to break up or dislodge air pockets.

In its cross-motion for SJ, Basic argued that its accused line of smoothie makers did not infringe because the stir stick was used to stir the contents of the blender, and the patentee disclaimed stirring. Vita-Mix’s infringement theory, by contrast, was that it was the positioning of the stir stick, not the stirring action, that prevented air pockets from forming. In its order granting SJ of no infringement, the district court held that the patentee disclaimed “all stirring.” The district court disposed of the two allegations of direct infringement by Basic for lack of direct evidence and proceeded to grant Basic’s motion for SJ for no infringement, which served as the basis for granting SJ of no contributory infringement and no inducement as well.

The Federal Circuit observed that disclaiming “all stirring, regardless of whether and how the stirring acts on air pockets, ignores the nature of the distinction between a positioning that prevents air pockets from forming and an operation that breaks up air pockets after they have begun to form.” Slip op. at 9. Thus, the Federal Circuit agreed with Vita-Mix that the district court’s disclaimer finding on SJ appears inconsistent with the district court’s earlier claim construction and that the earlier claim construction is correct.

Reminding that direct infringement can be proven by circumstantial evidence, the Court further concluded that the district court erred as a matter of law in disposing of the direct infringement claims by requiring direct evidence of infringement by either Basic or by Basic’s customers. Specifically, the Court found circumstantial evidence as to whether users tend to insert the stir stick into the pitcher without stirring, and under such conditions, whether the accused device would necessarily infringe created a genuine issue of material fact regarding whether employees and customers of Basic engaged in acts of direct infringement.

Turning to the grant of SJ of no contributory infringement, the Court reasoned that since the accused devices were undisputedly capable of noninfringing use, the question of contributory infringement turned on whether the noninfringing use was substantial. Adopting the opinion of Vita-Mix’s expert and assuming that customer use of the accused device directly infringes, unless the stir stick is used to break up air pockets or is in contact with the sides of the pitcher, the Court held that no reasonable jury could find that using the stir stick to stir is an insubstantial use of the accused device. Accordingly, the Court affirmed the district court’s grant of SJ of no contributory infringement.

Next, affirming the grant of SJ of no inducement, the Court found the record devoid of direct or circumstantial evidence of Basic’s intent to encourage customers to infringe the ’021 patent.

The Court found that the product instructions did not evidence a specific intent to encourage infringement, since they either taught a stirring action—which Basic could have reasonably believed was noninfringing—or evidenced an intent to discourage infringement. Looking to product design, the Court held that although the “default” vertical position of the stir stick may lead to infringing use under certain conditions, there was no evidence that Basic intended users to maintain the stir stick in the default position.

The Court next reviewed the grant of SJ of no trademark infringement under Sixth Circuit law. Vita-Mix claimed common law trademark protection for the number 5000. Although Vita-Mix had federal trademark protection for the mark “VITA-MIX,” it had not registered the mark “Vita-Mix 5000” or the number “5000” itself, and had never marked the number “5000” in commerce. Under Sixth Circuit law, an unregistered mark is entitled to protection as a trademark if it is inherently distinctive or has acquired secondary meaning. The Court found that there was no evidence in the record that the number “5000” had any secondary meaning, apart from its appearance in conjunction with the “VITA-MIX” mark within the designation “Vita-Mix® 5000,” and functioned only to distinguish the blender from previous Vita-Mix products on the market. Further, the Court found no evidence of record that Basic used the designation “5000” as a trademark in its sale of the Blender Solutions™ 5000 product. The Court concluded that no reasonable jury could find that either Vita-Mix’s or Basic’s use of the designation “5000” is a protectable mark, and, therefore, Vita-Mix could not make a prima facie case of trademark infringement as a matter of law.

The Federal Circuit next considered the grant of SJ of invalidity in favor of Vita-Mix. Having determined the district court’s application of a claim construction that excludes “all stirring” inconsistent with the original claim construction order, the Court remanded the issue for reconsideration under proper construction.

With regard to the grant of SJ of no inequitable conduct by Vita-Mix, the Court found that Basic made no genuine showing of deceptive intent. Basic’s charge on appeal was that the inventor of the ’021 patent made a false statement in a declaration when he distinguished low-powered prior art blenders as incapable of forming air pockets around the blades and submitted a declaration to the PTO that the cited prior art reference was irrelevant as it disclosed a low-powered blender. On appeal, Basic offered additional prior art evidence that the inventor’s statement was false. The Court, however, found that regardless of whether the statement is actually false, the inventor believed the statement to be true at the time it was made.

Finally, the Court affirmed the grant of SJ of no laches after finding that, although Vita-Mix was aware of Basic’s accused blenders and waited over five years before bringing suit, such delay did not give rise to the presumption of laches.

For these reasons, the Court affirmed the judgments of no inducement, no contributory infringement, and no trademark infringement; vacated and remanded the judgments of no invalidity for anticipation, obviousness, or lack of enablement; and affirmed the judgments of no inequitable conduct and no laches.

Judge Bryson, dissenting-in-part, disagreed with the majority’s judgment upholding the SJ rulings on inducement of infringement and contributory infringement. In Judge Bryson’s view, Vita-Mix introduced enough evidence to overcome Basic’s SJ motion. Specifically, with regard to inducement, for example, Judge Bryson pointed to Vita-Mix’s expert report, which states that, in normal operation, the accused device will practice the claimed invention and that Basic’s instructions for using the blenders did not direct users to avoid using the device in the default mode, i.e., when the stick is inserted but not being used to stir the contents of the blender.

Judge Bryson also looked to evidence of Basic’s videotaped television demonstration of the operation of the accused device, which depicted periods of time in which the operator did not use the stir stick or even touch it, instead leaving the stir stick in the default position during operation. Judge Bryson argued that a fact-finder could regard that advertising demonstration as a form of instruction on the use of the device that entailed using it, at least in part, in an infringing manner. Judge Bryson also pointed to some of Basic’s instructions arguably giving specific directions to use the accused device in the default manner for some purposes.

Regarding contributory infringement, Judge Bryson looked to whether the accused device can be used for substantial noninfringing purposes. In Judge Bryson’s view, the fact that the stir stick can be used in a noninfringing manner does not overcome the evidence offered by Vita-Mix that customers who use the Basic device with the stir stick inserted would infringe in a large percentage of instances and that the device had no substantial use that did not entail at least some period of infringement.