Federal Circuit Reverses District Court’s Grant of Summary Judgment of Invalidity

Holding

In Mosaic Brands, Inc. v. Ridge Wallet LLC, No. 22-1001, 1002 (Fed. Cir. Dec. 20, 2022), the Court of Appeals for the Federal Circuit (“Federal Circuit”) affirmed-in-part, reversed-in-part, and vacated-in-part a district court decision in a dispute between the parties related to money-clip wallets. Mosaic asserted that Ridge infringed its U.S. Patent No. 7,334,616 (’616 patent) and Mosaic’s trade dress. Ridge denied these allegations and alleged that Mosaic infringed its U.S. Patent No. 10,791,808 (’808 patent). The Federal Circuit reversed the District Court’s grant of summary judgement of invalidity of Ridge’s ’808 patent, because there was a genuine factual dispute over whether the invalidating product was prior art.

Background

The ’616 patent and the ’808 patent both have claims directed to a money-clip wallet. When Mosaic learned of the Ridge Wallet, it sued Ridge for infringement of the ’616 patent and its trade dress. A few months later, the United States Patent and Trademark Office issued Ridge’s ’808 patent, and Ridge asserted a counterclaim that Mosaic infringed the newly-issued patent. Mosaic raised invalidity and unenforceability due to inequitable conduct as defenses.

The claim terms at issue in Mosaic’s ’616 patent were “lip” and “varying thickness.”[1]

District Court

In the ’616 patent, the district court construed the term “lip” as a “connector made of extrudable or injectable plastic material that defines the outer dimension of enclosure.” The district court construed the term “varying thickness,” as “having a thickness, defining the outer dimensions of the holder, that causes the outer dimensions of the holder to be thicker in some parts and thinner in others.”

Following claim construction, both parties stipulated to noninfringement of the ’616 patent. The district court also found that the trade dress of Mosaic’s wallet was functional, and therefore invalid. With regard to the ’808 patent, the District Court granted summary judgment of invalidity based on a prior product of Mosaic’s.

The district court then entered final judgment of no liability for both Mosaic and Ridge. Both parties appealed.

Federal Circuit

On appeal Mosaic argued that the district court’s construction of the term “lip” was too narrow as the lip does not need to be made of extruded plastic. The Federal Circuit disagreed and upheld the district court’s construction of the term “lip,” based on evidence in the written description that “the device of the present invention is constructed of extrudable plastic materials.” Regarding the term “varying thickness,” Mosaic asserted that the proper construction should be the plain and ordinary meaning, while Ridge responded that the district court’s construction was the plain and ordinary meaning, and correct. The Federal Circuit agreed with the district court’s construction of the term “varying thickness,” pointing to Mosaic’s failure to offer intrinsic evidence for its position, and sole reliance on extrinsic dictionary evidence and attorney argument.

The Federal Circuit then moved to the district court’s grant of Mosaic’s motion for summary judgment that the challenged claims of Ridge’s ’808 patent are invalid as anticipated by Mosaic’s product. The Federal Circuit found there was a genuine issue of material fact as to whether the Mosaic product constituted prior art, with the decision turning on when the Mosaic product was first sold. Mosaic supported its position with inventor testimony. Ridge called this testimony into question based on a lack of sufficient corroboration and a genuine dispute as to the inventor’s credibility. The Federal Circuit rejected Ridge’s first argument by applying the rule of reason test to find that the testimony was credible in view of documentary evidence, such as design plans and invoices, made contemporaneously with the first sale. However, the Federal Circuit agreed with Ridge’s second argument, based on a finding that, although legal sufficient, the corroborating evidence would only be persuasive if a factfinder finds that the inventor is credible. In support of this finding, the Federal Circuit relied on Ridge’s citation to specific facts in the record casting doubt on the inventor’s credibility and the corroborating documents’ authenticity. Thus, the Federal Circuit reversed the District Court’s grant of summary judgment and remanded. Consequently, the Federal Circuit also vacated the district court’s denial of Mosaic’s inequitable conduct affirmative defense.

Lastly, the Federal Circuit affirmed the district court’s finding with respect to trade dress because Mosaic’s wallets are functional. 

Take-aways

This case highlights how claim construction may be determinative and why patent drafting is so important. Here the claim construction of “lip” was based on an express statement in the specification of “the present invention.” The narrow claim construction led to a stipulation of non-infringement. Using phrases such as “the invention” or “the present invention is” risks disclaiming any subject matter that does not fall within the description.  U.S. caselaw has many examples where that phrase has led to a narrow claim construction.  See, e.g., Scimed Life Systems, Inc. v. Advanced Cardiovascular Systems, Inc., 242 F.3d 1337 (Fed. Cir. 2001); Techtronic Indus. Co. v. ITC, 944 F.3d 901 (Fed. Cir. 2019); Pacing Technologies, LLC v. Garmin Intern., Inc., 778 F.3d 1021 (Fed. Cir. 2015); Luminara Worldwide, LLC v. Liown Elecs. Co., 814 F.3d 1343, 1353 (Fed. Cir. 2016); and C.R. Bard, Inc. v. U.S. Surgical Corp., 388 F.3d 858 (Fed. Cir. 2004). To the maxim of patent law that claims are construed in light of the specification, and are not limited to a designated preferred embodiment, the practitioner should be cautioned, “unless that embodiment is in fact the entire invention presented.” Vulcan Eng'g Co. v. Fata Aluminum, Inc., 278 F.3d 1366 (Fed. Cir. 2002).

Practitioners are also reminded of the primacy of intrinsic evidence in claim construction. Under Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005) (en banc), the intrinsic sources for determining how one of ordinary skill in the art would understand the claims are the words of the claims themselves, the specification, and the prosecution history. While extrinsic evidence “can shed useful light on the relevant art,” it is “less significant than the intrinsic record in determining ‘the legally operative meaning of claim language.’” Phillips, 415 F.3d at 1317. As noted above, the Federal Circuit faulted Mosaic for offering “no intrinsic evidence” for its proposed claim construction. “Only if there were still some genuine ambiguity in the claims, after consideration of all available intrinsic evidence, should the trial court have resorted to extrinsic evidence[.]” Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1584 (Fed. Cir. 1996).

The case also raises the age-old question – is it prior art? Mosaic did not do enough in this case to prove when its products were on sale. In this case, the determination came down to the inventor’s credibility and the authenticity of the corroborating documents. While the rule of reason test guides a reasonable factfinder, questions of material fact may still preclude summary judgment and the standard of clear and convincing evidence of invalidity must still be met.

Endnotes

[1] Claim 1 of the Mosaic’s ‘’616 patent reads: 1. A holder for securely and simultaneously retaining flexible articles and rigid cards, said holder comprising:

a nominally rectangular and nominally flat planar first panel having interior and exterior surfaces, a lip extending nominally around three edges of said first panel along said interior surfaces, said lip being at right angles to the plane of said first panel;

a nominally rectangular and nominally flat planar second panel having interior and exterior surfaces, a lip extending nominally around three edges of said second panel along said interior surface and configured to form a mirror image of said first panel, said second panel being adapted to be attached to said first panel along said three edges to form an open-ended enclosure of sufficient size to store said rigid cards within said interior of said enclosure, said enclosure being nominally rectangular with two longitudinal sides, an open end, and a closed end;

a resilient article retaining member having an attached end and a free end extending from one end of said enclosure and over the exterior of said first panel, said free end of said article retaining member being biased toward said exterior surface of said first panel;

wherein said first panel and said second panel each has lips of varying thickness.