Court: Court of Appeals for the Federal Circuit; October 27, 1995; Federal Appellate Court
Custom Metalcraft, Inc. appeals a ruling by the United States District Court for the District of Nebraska, which found that its liquid storage tanks infringed on Hoover Group, Inc.'s patents, specifically United States Patents No. 4,840,284 ('284 patent) and No. 4,785,958 ('958 patent). The Federal Circuit affirms the validity of both patents and confirms infringement of the '284 patent. However, it reverses the infringement finding related to claim 1 of the '958 patent, allowing the district court to reassess damages and consider potential infringement of claims 2 or 3 of the same patent.
Both parties manufacture metal tanks, with the contested products being sloped-bottom tanks designed for efficient fluid drainage. Hoover asserts that its patented designs offer simplicity and cost-effectiveness while allowing full drainage. The '958 patent includes a structure with a bottom plate featuring a bend from the discharge opening and a "divergent gap" that facilitates drainage. Claim 1 of the '958 patent outlines specific structural features of the tank, including a flat bottom plate and a design that promotes gravity-assisted drainage without needing to tip the tank.
The '284 patent encompasses a single claim for a tank with a sloped bottom created by contoured surfaces and creases in the metal, ensuring that the tank's inner surface directs fluid toward the discharge opening.
The outer side walls of a bottom plate are secured to its upper edge, with an outer surface matching the inner surface's contour. Feet are attached at the corners of the plate, sculpted to fit the outer surface, ensuring that when resting on a horizontal surface, the discharge opening is at the lowest point, and the inner surface slopes smoothly toward the opening. The district court found that Custom and Hoover's prior tanks did not anticipate or invalidate the patents in question, concluding that Custom failed to provide evidence for obviousness, and both patents were infringed.
Custom claimed the patents were invalid under 35 U.S.C. § 102(a) and (b) due to prior sales of their tanks. A patent is invalid if the invention was known or used by others before the applicant's invention (§ 102(a)) or was in public use or on sale more than a year before the patent application (§ 102(b)). Anticipation requires that all elements of the claimed invention were known or used prior to the patentee's invention.
The court examined several Custom products allegedly embodying the patents, including a sugar bin sold in 1982, a fertilizer tank from 1981, and various tanks sold to AT&T and others, asserting a public use bar under § 102(b). The products related to the '284 patent were found unsuitable for liquid storage, with conflicting testimonies on the sugar bin's capabilities. The '958 patent's claims were also contested through sales to Four Seasons Paint Co. and others in 1987. The court determined that none of these products contained all necessary elements of the patents' claims. The findings were not deemed clearly erroneous, affirming that the prior tanks did not anticipate or invalidate the '284 patent.
The district court examined Custom's sales to the Missouri Highway Department and Four Seasons Paint Co., determining that the tanks had a bottom with multiple creases and planar inner surfaces, unlike the curved design specified in the '958 patent. Custom failed to demonstrate that the court’s factual findings were clearly erroneous. Furthermore, Custom did not contest the court's conclusion that tanks sold by Hoover to W.R. Grace did not infringe upon the '958 patent, nor did it present clear and convincing evidence of any prior device containing all elements of either patent's claims. The court affirmed that the patents are valid under 35 U.S.C. § 102(a) and (b).
Regarding obviousness, Custom claimed that the inventions of the '284 and '958 patents would have been obvious at the time of invention, thus invalid under 35 U.S.C. § 103. However, the district court found that Custom provided no evidence at trial to support this claim. Custom's references to prior tanks and expert testimony were deemed insufficient to establish an obviousness defense, as they were focused on anticipation rather than obviousness. Custom had also stipulated that its patent expert would not testify on the matter of obviousness. Therefore, the court concluded that no valid obviousness defense was presented, making it unavailable for appellate review.
In terms of the '284 patent, the district court ruled that certain tanks sold by Custom in February 1987 infringed claim 1 of that patent. Custom argued that the patent was not issued until 1989, thus sales prior to issuance cannot constitute infringement. Hoover countered that the Four Seasons tanks served as templates for subsequent identical products made or sold after the patent's issuance, clarifying that "Four Seasons tanks" referred generically to that series of products.
Hoover presented Custom's work orders and engineering drawings at trial to demonstrate that the tanks built from these orders conform to the limitations of the '284 patent claim. Expert testimony supported Hoover's claims regarding the timing of the tanks' manufacture and sale, with Custom not contesting this evidence or asserting any structural differences between the tanks. The district court found that the original Four Seasons tank infringed the '284 patent, despite erroneously attributing liability to it; however, this error was not deemed clear. Damages for infringement can only be sought for actions occurring after the '284 patent was issued.
Regarding the '958 patent, the district court ruled that tanks sold by Custom after November 22, 1988, infringed this patent. Custom argued that the court overlooked a claim element absent in the accused tanks, asserting that claim 1 was not infringed. The infringement analysis involves claim construction as a legal matter, which is reviewed de novo on appeal. Claim 1 mandates a specific configuration of a bend in the tank’s bottom plate that directs liquid by gravity towards the discharge opening.
The district court interpreted claim 1 to allow the bend to be either an inverted V or a V shape. However, the court found that the accused tanks, with an inverted V shape, still infringed despite not conforming to the trough shape depicted in the patent, which facilitates the necessary gravity flow of liquid. Hoover contended that the term "into" could encompass a broader interpretation, yet no patent drawings or specifications supported this interpretation. Ultimately, the conclusion was that the bend must extend downward to properly align with the claim's requirements for liquid flow.
A tank with only an upwardly extending bend does not infringe claim 1 of the '958 patent, as the district court's infringement finding was based on an incorrect claim construction. Correctly interpreted, there is no evidence that supports a finding of infringement for tanks lacking a structure that allows liquid to flow along the bend. The '958 patent contains three claims: claim 1 pertains to a specific tank structure, while claims 2 and 3 relate to construction methods. The district court did not specify which claims were infringed, and Custom asserts that Hoover failed to provide evidence that the accused tanks were built using the methods of claims 2 and 3. Conversely, Hoover claims its evidence demonstrates that Custom manufactured tanks identical to claim 1 and built according to claims 2 and 3. The district court's ruling focused solely on the structure of the tanks and did not address the method of construction, making it impossible to evaluate claims 2 and 3. On remand, the district court may consider potential infringement of claims 2 and 3 based on the interpretation of claim 1.
Regarding attorney fees, Custom sought fees arguing that Hoover initiated the lawsuit despite being informed of prior tanks that could anticipate the patents, but the district court found no anticipation, leading to the denial of Custom's request. Hoover also sought fees, claiming Custom filed a frivolous appeal, but this was denied as one of the district court's adverse determinations was reversed on appeal. Both sides' allegations of frivolous behavior were deemed unwarranted and unprofessional.
In conclusion, the court affirmed that the '284 and '958 patents are not invalid, affirmed the infringement of the '284 patent, reversed the infringement finding for claim 1 of the '958 patent, and remanded for consideration of claims 2 and 3. Each party is responsible for its own costs. The overall judgment is affirmed in part, reversed in part, and remanded.
