The parties manufacture layered polyethylene canoes. Old Town is the assignee of the ’963 patent, which relates to a method of making multilayered plastic laminate boat hulls by rotational molding. The ’963 patent describes a method of releasing successive charges of plastic particulate into a heated mold, which is rotated on two axes in a large oven. Each charge melts and flows together to form a cross-linked plastic layer. A successive charge is not released into the mold until the layer formed by the prior charge has reached an appropriate state. The boat hull will not be usable if a successive charge is released too soon or too late, making it critical to recognize when the preceding layer has reached the appropriate state of completion. The invention recognizes that coalescence of the particulate material will continue to completion even after the mold is removed from the oven if the mold doors are kept closed to retain the residual heat of the mold, thereby reducing oven time and cost.

Confluence filed a counterclaim, seeking a declaratory judgment that the patent was invalid and unenforceable.

Claim Construction

The district-level fight centered on claim construction. The focal point of appeal was the limitation "after coalescence of the third charge is completed," "a step that takes place after the mold assembly has been removed from the oven and has been air cooled." The parties disagreed when the coalescence stage was complete.

On June 2, 2003, the district court conducted a Markman hearing and, having evaluated the intrinsic record, contemporaneous dictionaries, cited prior art, and expert testimony, concluded that “it would be understood that ‘coalescence’ is not complete merely because a layer has been formed,” rather, “coalescence” was “‘complete’ when it has all necessary parts, elements or steps, or is fully carried out.”

Thus, the original claim construction was favorable to Confluence, which the CAFC affirmed.

In construing the claim terms in this case, the district court began its analysis by referring to dictionary definitions presented by the parties. The district court’s reference to the dictionary was not an improper attempt to find meaning in the abstract divorced from the context of the intrinsic record but properly was a starting point in its analysis, which was centered around the intrinsic record consistent with Phillips.

The claim does not state explicitly whether the completion of coalescence means that the plastic particulate must reach its optimum state. However, the written description provides guidance in describing coalescence as being complete when it reaches an optimal state as opposed to when the process is brought to a halt... The prosecution history supports the conclusion that completion of coalescence means progress of coalescence to the optimum state as opposed to being brought to a halt at an arbitrary point by operator intervention.

Old Town is not entitled to a claim construction divorced from the context of the written description and prosecution history. See Nystrom v. Trex, Co., 424 F.3d 1136, 1145 (Fed. Cir. 2005) (“In the absence of something in the written description and/or prosecution history to provide explicit or implicit notice to the public — i.e., those of ordinary skill in the art — that the inventor intended a disputed term to cover more than the ordinary and customary meaning revealed by the context of the intrinsic record, it is improper to read the term to encompass a broader definition simply because it may be found in a dictionary, treatise, or other extrinsic source.”).

District Court Rulings

A jury trial began on October 20, 2004. After 5 days of trial, the parties filed cross-motions for JMOL, Confluence moving for noninfringement and Old Town moving that its patent was not invalid and not unenforceable. After hearing argument on the infringement question, the district court granted Confluence’s motion, concluding from the bench that Confluence’s canoes do not infringe Old Town’s ‘963 patent. The following day, the district court entertained argument on validity and enforceability and summarily concluded, without explanation, that, because there was not sufficient evidence to meet the clear and convincing evidence standard required to overcome the presumption of validity, the invalidity issues would not be sent to the jury. The district court also held that there was not sufficient evidence for it to find inequitable conduct. On November 10, 2004, the district court entered judgment, granting both motions for JMOL and dismissing without prejudice all remaining claims.

Doctrine of Equivalence

To overcome the unfavorable claim construction, Old Town had argued for broadening claim scope by doctrine of equivalence.

As to the doctrine of equivalence, Confluence argues that prosecution history estoppel applies and precludes a finding of infringement under the doctrine of equivalents in this case... As for equivalents, the prosecution history shows that the claims were narrowed, triggering a presumption that subject matter was surrendered.

Invalidity

The CAFC found that the district court had improperly dismissed Confluence's arguments of invalidity by its summary judgment grant to Old Town, as the facts were disputable, and therefore not simply a matter of law.

The parties’ arguments highlight a number of disputed fact questions, including credibility determinations, to be resolved by the jury. When viewed in a light most favorable to Confluence, a reasonable juror could find support for Confluence’s argument that the ’963 patent would have been an obvious improvement over the prior art. We therefore vacate the district court’s grant of JMOL that the ’963 patent was not invalid for obviousness.

Enablement

Confluence had argued that the claimed process took experimentation to get right. Old Town admitted that “a molder would need to do some experimentation to determine the time and oven temperature.” Yet the district court had ruled as a matter of law, without regard to what the CAFC considered disputable facts.

Confluence introduced clear and convincing evidence that, in attempting to practice the invention disclosed in the ’963 patent, persons of ordinary skill in the art would have to develop time and temperature parameters through repeated experimental attempts to practice the invention. Confluence also showed that, contrary to Old Town’s assertion, its expert was not able to carry out the entire process as set forth in the ’963 patent. When viewed in a light most favorable to Confluence, this evidence, if believed by a juror, could support Confluence’s claim of invalidity on the ground that the ’963 patent is not enabled. Because Confluence produced evidence sufficient for a reasonable juror to conclude that the trial and error required to practice the claimed invention could be unduly laborious, we vacate the district court’s grant of JMOL on the issue of enablement.

Best Mode

Confluence’s evidence suggests that Old Town did not disclose the details of the best mode of the invention. While we note that “[s]ubject matter that is not part of the invention that is claimed need not be included in the specification, and thus is not subject to the best mode requirement,” Cardiac Pacemakers, 381 F.3d at 1379 (citing Engel Indus., Inc. v. Lockformer Co., 946 F.2d 1528, 1532 (Fed. Cir. 1991) (“The best mode inquiry is directed to what the applicant regards as the invention, which in turn is measured by the claims.”)),... [a] reasonable juror could find that the specification’s failure to disclose that which was detailed in the document produced by Old Town was a failure to disclose the best mode. We therefore vacate the district court’s grant of JMOL on the ground of no best mode violation.

Inequitable Conduct

Confluence had argued inequitable conduct, on failing to disclose products made a year before filing the '393 patent that were material to the claimed invention.

Alternatively, Confluence argues that inequitable conduct could lay independently based on Old Town’s failure to disclose best mode... Confluence overlooks our precedent, which explains that inequitable conduct and invalidity “are distinct and without commonality either as claims or in a relation to the underlying fact issues.” Gardco Mfg., Inc. v. Herst Lighting Co., 820 F.2d 1209, 1213 (Fed. Cir. 1987).

Establishing inequitable conduct requires proof by clear and convincing evidence that the misrepresentation made to the PTO was material, and that the patentee acted with intent to deceive the PTO. Id. at 872. Because it is an equitable issue, the ultimate determination of inequitable conduct is committed to the discretion of the trial court. Id. at 876.

The CAFC conceded that Confluence may have a point with materiality, but failed to even attempt to reach the bar of intent.

Even if materiality is shown, however, Confluence points to no evidence of intent to deceive the PTO. “[M]ateriality does not presume intent, which is a separate and essential component of inequitable conduct.” Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1351 (Fed. Cir. 2002) (quotation and citation omitted). Furthermore, in Consolidated Aluminum, 910 F.2d at 808, we stated that “since the failure to disclose the best mode is not excused even if unintentional, but inequitable conduct requires a ‘threshold’ level of intent, the failure to disclose the best mode will not constitute inequitable conduct in every case.” (citations omitted). Confluence does little more than urge this court to draw an inference of intent to deceive, arguing that the applicant or his attorney knew, or should have known that withheld information would be material. Confluence’s general argument on this record is not sufficient to enable us to conclude that the district court abused its discretion in finding no inequitable conduct. The district court’s JMOL of no inequitable conduct is, thus, affirmed.

Conclusion

So, the CAFC upheld the district court's summary judgment rulings of non-infringement, and failure to find inequitable conduct, but remanded for further proceedings regarding validity. On top of it all, Old Town has to pay costs.

Judge Mayer dissented, with some excellent arguments, that the case should have died with a ruling of non-infringement "because there is no longer an actual controversy over the invalidity and unenforceability counterclaims... For the majority nevertheless to address the merits of the cross-appeal, and remand for further proceedings, is wasteful and advisory."

As Dennis Crouch in Patently O observed, "This case is a prime example of why a defendant should include declaratory judgment counterclaims rather than just defenses. With counterclaims, the plaintiff will need the defendant’s agreement to end the case." Sometimes, the best defense is a good offense.