Claim Construction

In claim construction, the trial court construed in asserted claim 1 that the needle guard “requires that the guard substantially contain the needle-assembly at all times.” Thus, if a needle guard is sold without the needle set, in a so-called open-shell configuration, it would not infringe.

By emphasizing that the guard is locked in a protective configuration, or molded to enclose the needle assembly, the specification conveys the concept of a permanent cover for the needle. Indeed, the figures in the specification show a completely enclosed, and thus guarded, needle.

Because the [accused device] Platypus is a “stand-alone guard” without a needle, the trial court granted summary judgment of non-infringement to the defendants on multiple claims.

Other contested claim terms were construed in light of the specification. One argument was whether the term "slot," used in a claim, implied any limitation of width, or could be broadly construed, without limit.

The trial court identified the crux of the dispute over “slot” as “whether . . . the slots for the wings should have defined widths closely approximating the wings’ thickness.” Construction Clarification Order I, slip op. at 19. If “slot” limits the size of the opening to accommodate the “minor” thickness of the ’311 patent’s wings, the Platypus would not infringe because its jaws accommodate any thickness. Claim Construction Order, slip op. at 19. On the other hand, if “slot” contains no thickness limitation, the Platypus would infringe because it opens to receive a wing of any size. Id., at 19.

The claim language recites only “slot.” Thus, the claim itself does not incorporate any thickness limitation. Moreover, the specification provided no size limitation on the opening. In a tribute to its complete analysis, the trial court went beyond those primary sources to also consult the prosecution history. Phillips, 415 F.3d at 1317 (a court “should also consider the patent’s prosecution history, if it is in evidence”). The record before the Patent Office shows that the patentees amended the claims of Application Serial Number 252,564, which is the application from which the ’311 patent (and ’072 patent) derived, to avoid U.S. Patent No. 4,840,619 (Hughes Patent).

In amending the claims to avoid the Hughes Patent, however, the applicant did not limit the size of the slot, as argued by JMS and ITL. The amendments concerned only the orientation of the needle wings that moved back and forth through the slot. To distinguish the Hughes Patent, the patentee did not have to, and did not actually, limit the width of the slot. Thus, the trial court correctly construed “slot” as not requiring a defined width, as long as it was capable of receiving a wing. Construction Clarification Order I, slip op. at 14.

Under this claim construction, the trial court found that “as a matter of law, every reasonable jury would find that there is a slot in the [Platypus] closed-shell configuration.” Construction Clarification II & SJ Order, slip op. at 29. Therefore, the trial court held that when sold in the United States in its “closed-shell” configuration, the Platypus literally infringed claims 46–47, 49, and 52–53 of ’311 patent, when closed over the tubing of a needle-set. Id.... This court affirms the trial court’s summary judgment ruling.

Contributory Infringement

DSU wanted to stick ITL with contributory infringement as a matter of law. ITL responded that it sold "most Platypus guards" outside the U.S., and that the record had no evidence that the Platypus as sold was used in an infringing manner in the United States because ITL shipped its Platypus units to JMS in San Francisco in the open-shell configuration, which didn't have the needle sets, and thus does not infringe.

DSU introduced no evidence that those units were ever put into the closed-shell configuration in the United States. Additionally, the record contained evidence that when instructed to do so by JMS, ITL would ship Platypus guard units F.O.B. into the United States. The record also shows, however, that ITL only sold the Platypus in its open-shell configuration.

Under § 271(c):

[w]hoever offers to sell or sells within the United States . . . a component of a patented machine, manufacture, combination or composition . . . constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.

35 U.S.C. § 271(c) (2000) (emphases added). In discussing 35 U.S.C. § 271(c), the Supreme Court stated:

One who makes and sells articles which are only adapted to be used in a patented combination will be presumed to intend the natural consequences of his acts; he will be presumed to intend that they shall be used in the combination of the patent.

Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 125 S. Ct. 2764, 2777 (2005). In addition, the patentee always has the burden to show direct infringement for each instance of indirect infringement. Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1272 (Fed. Cir. 2004); Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 774 (Fed. Cir. 1993) (“Liability for either active inducement of infringement or contributory infringement is dependent upon the existence of direct infringement.”). Thus, to prevail on contributory infringement, DSU must have shown that ITL made and sold the Platypus, that the Platypus has no substantial non-infringing uses in its closed-shell configuration, that ITL engaged in conduct (made sales) within the United States that contributed to another’s direct infringement, and that JMS engaged in an act of direct infringement on those sales that ITL made in the United States.

The trial court properly applied these legal principles. The trial court determined that the record showed that ITL supplied the Platypus, that the Platypus had no substantial non-infringing uses in its closed-shell configuration, and that ITL intended to make the Platypus that resulted in the potential for contributory infringement as a product designed for use in the patented combination. DSU Med. Corp. v. JMS Co., JMS N. Am. Corp., & ITL Corp. PTY, Nos. C-00-1826-DLJ, C-99-2690-DLJ, slip op. at 1-3 (N.D. Cal. Sept. 20, 2004) (Post Trial Motions’ Order). In fact, even beyond the minimal intent requirement for contributory infringement, ITL acted with the knowledge of the ’311 patent and knowledge that the component was especially made or adapted for use in an infringing manner. Id., slip op. at 22-24. However, the district court denied the motion for a new trial because the record does not show that “the alleged contributory act ha[d] a direct nexus to a specific act of direct infringement.” Id., slip op. at 25.

Upon review of the record, this court perceives, as well, an absence of evidence of direct infringement to which ITL contributed in the United States. Under the terms of the ’311 patent, the Platypus only infringes in the closed-shell configuration. When open, the Platypus, for instance, lacks a “slot” as well as other claimed features. ITL only contributed to placing the Platypus into the closed-shell configuration in Malaysia (category 1, above); not in the United States. Section 271(c) has a territorial limitation requiring contributory acts to occur in the United States.

Inducing Infringement

On the issue of inducing infringement by ITL, the CAFC considered en banc. DSU was denied a finding of inducement for lack of evidence. The CAFC reviewed DSU's contention that the district court provided the wrong instructions to the jury as the to standard for inducement.

This section addresses, in the context of induced infringement, “the required intent . . . to induce the specific acts of [infringement] or additionally to cause an infringement.” MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1378 n.4 (Fed. Cir. 2005) (citing MercExchange, L.L.C. v. eBay, Inc., 401 F.3d 1323, 1332 (Fed. Cir. 2005)). This section clarifies that intent requirement by holding en banc that, as was stated in Manville Sales Corp. v. Paramount Systems, Inc., 917 F.2d 544, 554 (Fed. Cir. 1990), “[t]he plaintiff has the burden of showing that the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.” The requirement that the alleged infringer knew or should have known his actions would induce actual infringement necessarily includes the requirement that he or she knew of the patent. See Golden Blount, Inc. v. Robert H. Peterson Co., 438 F.3d 1354, 1364 n.4 (Fed. Cir. 2006) (citing Manville and explaining that the inducing infringement standard was satisfied “because it is undisputed that [the alleged infringer] had notice of the patent”).

Under section 271(b), “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. § 271(b). To establish liability under section 271(b), a patent holder must prove that once the defendants knew of the patent, they “actively and knowingly aid[ed] and abett[ed] another’s direct infringement.” Water Technologies Corp. v. Calco, Ltd., 850 F.2d 660, 668 (Fed. Cir. 1988) (emphasis in original). However, “knowledge of the acts alleged to constitute infringement” is not enough. Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1363 (Fed. Cir. 2003) (citation omitted). The “mere knowledge of possible infringement by others does not amount to inducement; specific intent and action to induce infringement must be proven.” Id. at 1364 (citing Manville, 917 F.2d at 554).

DSU asked the court to instruct the jury, purportedly in accordance with Hewlett-Packard Co. v. Bausch & Lomb, Inc., 909 F.2d 1464 (Fed. Cir. 1990), that to induce infringement, the inducer need only intend to cause the acts of the third party that constitute direct infringement. The trial court gave the following instruction to the jury:

In order to induce infringement, there must first be an act of direct infringement and proof that the defendant knowingly induced infringement with the intent to encourage the infringement. The defendant must have intended to cause the acts that constitute the direct infringement and must have known or should have known than[sic] its action would cause the direct infringement. Unlike direct infringement, which must take place within the United States, induced infringement does not require any activity by the indirect infringer in this country, as long as the direct infringement occurs here.

Transcript, at 432. Thus, the court charged the jury in accordance with Manville. The statute does not define whether the purported infringer must intend to induce the infringement or whether the purported infringer must merely intend to engage in the acts that induce the infringement regardless of whether it knows it is causing another to infringe.

In Grokster, which was a copyright case, the Supreme Court cited with approval this court’s decision in Water Technologies when it discussed inducement of infringement... Grokster, thus, validates this court’s articulation of the state of mind requirement for inducement. See Manville, 917 F.2d at 544. In Manville, this court held that the “alleged infringer must be shown . . . to have knowingly induced infringement,” 917 F.2d at 553, not merely knowingly induced the acts that constitute direct infringement. This court explained its “knowing” requirement:

It must be established that the defendant possessed specific intent to encourage another’s infringement and not merely that the defendant had knowledge of the acts alleged to constitute inducement. The plaintiff has the burden of showing that the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.

Id. at 553. In Water Technologies, also cited with approval by the Supreme Court, 125 S. Ct. at 2779, this court clarified: “While proof of intent is necessary, direct evidence is not required; rather, circumstantial evidence may suffice.” 850 F.2d at 668. Although this court stated “that proof of actual intent to cause the acts which constitute the infringement is a necessary prerequisite to finding active inducement,” Hewlett-Packard, 909 F.2d at 1469, Grokster has clarified that the intent requirement for inducement requires more than just intent to cause the acts that produce direct infringement. Beyond that threshold knowledge, the inducer must have an affirmative intent to cause direct infringement. In the words of a recent decision, inducement requires “‘that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another’s infringement.’” MEMC Elec., 420 F.3d at 1378 (Fed. Cir. 2005) (quoting Minn. Mining & Mfg. Co. v. Chemque, Inc., 303 F.3d 1294, 1304-05 (Fed. Cir. 2002)). Accordingly, inducement requires evidence of culpable conduct, directed to encouraging another’s infringement, not merely that the inducer had knowledge of the direct infringer’s activities. Grokster, 125 S. Ct. at 2780; Manville, 917 F.2d at 553. Accordingly, the district court correctly instructed the jury in this case.

Judges Michel and Mayer filed a dissent that the en banc ruling was overkill.

Although we agree with the court's analysis in Section III.B, we do not consider it necessary to address this issue en banc. DSU misreads Hewlett-Packard as if we had said "proof of actual intent to cause the acts which constitute the infringement is a necessary and sufficient prerequisite to finding active inducement," but we did not.

There is no actual conflict between Hewlett-Packard and Manville and, thus, no need for intervention by the full court. Such rare intervention should be reserved for real conflicts as well as cases of exceptional importance. See Fed. R. App. P. 35(a). In our opinion, the panel was free to conclude that the district court correctly rejected DSU's proffered jury instruction because, misunderstanding Hewlett-Packard, DSU did not correctly state the law.

Damages

Beginning on page 20, there is a long section on appeals by both parties of the damages award with regard to price erosion and lost profits. The CAFC ruled that, because "the jury had before it evidence of price erosion," there was "no basis to speculate that the jury did not award price erosion damages as part of its lost profits or reasonable royalty analysis. [T]he verdict form does not segregate the damages award into categories beyond lost profits and reasonable royalties," and the appeals court found not reason to wade in.

Evidence; Invalidity

Page 25 beings a section on evidentiary standard, both admitting and excluding evidence. Page 26 covers DSU whining about its claims found invalid as obvious. The CAFC left the district court ruling, in toto, intact.