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Adding Claim Limitations in Response to a Rejection of Closely Related Claims Without Explanation Creates Estoppel Barring Assertion of DOE

11-1487
October 12, 2012

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Last Month at the Federal Circuit - November 2012

Judges: Rader (author), Plager, Linn

[Appealed from: D. Del., Chief Judge Sleet]

In Energy Transportation Group, Inc. v. William Demant Holding A/S, Nos. 11-1487, -1488, -1489 (Fed. Cir. Oct. 12, 2012), the Federal Circuit affirmed the district court’s denial of a new trial or relief from judgment after a jury found William Demant Holding A/S, WDH Inc., Oticon Inc., Oticon A/S, Bernafon AG, Bernafon LLC, Widex A/S, and Widex USA, Inc. (collectively “Defendants”) infringed U.S. Patent No. 4,731,850 (“the ’850 patent”). The Federal Circuit also affirmed the district court’s denial of Widex A/S and Widex USA, Inc.’s (collectively “Widex”) motion for JMOL of no willful infringement of the ’850 patent, and affirmed the district court’s calculation of damages awarded to Energy Transportation Group, Inc. (“ETG”). The Federal Circuit further affirmed the district court’s judgment of noninfringement of U.S. Patent No. 4,879,749 (“the ’749 patent”) on the basis that prosecution history estoppel barred the jury’s finding of infringement under the DOE.

The patents-in-suit, owned by ETG, are directed to technologies for reducing acoustic feedback in programmable digital hearing aids. ETG filed suit against Defendants, alleging infringement of both the ’850 patent and the ’749 patent. The district court denied Defendants’ motions for JMOL of invalidity for lack of written description and anticipation and no infringement under the DOE for the ’850 patent, and a jury determined that Defendants infringed the ’850 patent and awarded damages to ETG. The district court also denied Widex’s motion for JMOL of no willful infringement of the ’850 patent. The district court granted Defendants’ motions for JMOL of noninfringement of the ’749 patent under the DOE. All parties appealed.

First, the Federal Circuit addressed claim construction of the ’850 patent, which recited “a programmable filter,” a “programmable delay line filter,” or a filter that is “programmed” to reduce acoustic feedback. The district court construed “programmed” to mean “provided with one or more values so as to produce a response,” and Defendants asserted that the district court erred by not limiting “programmed” to require that the values in the claimed invention were “externally calculated” or were “fixed” to impart cancellation of acoustic feedback. The Court found that nothing in the ’850 patent claims indicates that the plain and ordinary meaning of “programmed” should be limited to external or fixed programming, and further, that the specification does not envision a filter with permanently “fixed” coefficients. Therefore, the Court affirmed the district court’s construction of the asserted claims.

Turning to the district court’s denial of Defendants’ motions for JMOL of invalidity of the ’850 patent, on lack of written description, the Court noted that the trial record contained substantial evidence from which the jury could conclude that the ’850 patent conveyed to one skilled in the art that the inventors were in possession of a programmable hearing aid that could use adaptive filtering for feedback cancellation at the time of filing. On anticipation, the Court noted that the jury assessed the credibility of both sides’ experts, and was entitled to credit the testimony of ETG’s expert that the reference in question did not disclose a substantial reduction of feedback, as required by the claim. Thus, the Court affirmed the district court’s denial of Defendants’ motion for JMOL of invalidity.

Next, the Court considered whether the district court erred in denying Defendants’ motions for JMOL of no infringement under the DOE. The Court agreed with the district court’s finding that the jury had substantial evidence from which to conclude that Defendants’ products met each of the disputed claim limitations of the ’850 patent, either literally or under the DOE. Further, the Court observed that while improvements in technology allowed Defendants’ products to constantly recalculate filter coefficients using electronics located on the hearing aid, the accused devices nonetheless performed the same function in substantially the same way, with substantially the same result claimed by the ’850 patent. Thus, because Defendants also failed to demonstrate that the asserted range of equivalents would read on the prior art, the Court affirmed the district court’s denial of Defendants’ motions for JMOL of no infringement under the DOE.

Then the Court noted that Widex appealed the district court’s denial of JMOL of no willful infringement. But the Court further noted that ETG did not appeal the district court’s denial of ETG’s motions for enhanced damages and for attorneys’ fees due to Widex’s willful infringement of the ’850 patent. As no consequences flowed from the district court’s decision, the Court declined to address the issue of Widex’s willful infringement of the ’850 patent.

The Court also examined the damages awarded to ETG due to Defendants’ infringement of the ’850 patent. On appeal, Defendants challenged the district court’s admission of the report from the German Federal Cartel Office (“Cartel Report”) under Federal Rule of Evidence 403, arguing that the report’s conclusions regarding the oligopolistic nature of the hearing aid market were unduly prejudicial. The Court found that ETG relied on the facts presented in the Cartel Report regarding the hearing aid market and industry structure, and not the legal conclusion that the market was an oligopoly, to argue for damages at a higher royalty rate than that suggested by Defendants. Thus, the Court held that Defendants had not shown that the district court had acted irrationally or arbitrarily in finding that the probative value of the Cartel Report outweighed any potential prejudice.

Defendants also sought a new trial on damages because ETG’s expert used the 25 percent rule of thumb in his analysis of a reasonable royalty rate. Because the jury adopted neither expert’s damages analysis wholesale, but awarded lump-sum damages that equated to effective royalty rates in the range of 4-5 percent, the Court concluded that Defendants did not demonstrate that the damages award was outrageous or grossly excessive and that the district court did not err in denying a new trial.

The Court also addressed Defendants’ challenge to the amount of the damages awarded to ETG, which Defendants asserted was calculated on a royalty base that included sales under the ’749 patent. Although the district court granted Defendants’ motion for JMOL of noninfringement of the ’749 patent, Defendants never requested reconsideration of the damages award, and the Court noted that it will not consider arguments raised for the first time on appeal. Moreover, even if Defendants had not waived this argument, the Court noted that it cannot “correct” a damages figure by extrapolating a royalty rate from the jury’s lump-sum damages award and multiplying that royalty rate by a revised sales base. Moreover, the Court held that the district court did not abuse its discretion in this case by following the standard rule of awarding prejudgment interest.

The Court also addressed the district court’s grant of Defendants’ motions for JMOL of noninfringement for the ’749 patent under the DOE. Upon review of the prosecution history of the ’749 patent, the Court observed that ETG narrowed the claimed method of cancelling feedback from one requiring only modifying frequency gain and unspecified “feedback characteristics” to one specifically requiring measurement of phase and amplitude. The Court found that ETG had not overcome the presumption that the narrowing amendment was made to secure the ’749 patent, as the prosecution history showed that the claim limitation at issue was added in response to a rejection of closely related claims, and provided no other explanation for the limitation. Moreover, the Court noted that the difference between the phrase “determining the effect of phase and amplitude” and “measuring phase and amplitude” was “clearly foreseeable,” as ETG used the “determining” language in the ’850 patent. Slip op. at 28. Thus, the Court affirmed the district court’s application of prosecution history estoppel to bar the assertion of infringement under the DOE by the accused devices.

Accordingly, the Court affirmed the district court’s decisions in all respects.

Summary authored by James A. Cooke III, Ph.D., Esq.