Engineered Products Co. v. Donaldson Company, Inc., No. 04-1596 (Fed. Cir. 8/31/2005), 04-1596.

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ENGINEERED PRODUCTS CO., Plaintiff-Cross Appellant, v. DONALDSON COMPANY, INC., Defendant-Appellant.

No. 04-1596.

No. 05-1002.

No. 05-1037.

United States Court of Appeals, Federal Circuit.

Decided: August 31, 2005.

Before NEWMAN, Circuit Judge, ARCHER, Senior Circuit Judge, and SCHALL, Circuit Judge.

SCHALL, Circuit Judge.

DECISION

Donaldson Company, Inc. ("Donaldson") appeals from the judgment of the United States District Court for the Northern District of Iowa awarding Engineered Products Co. ("EPC") damages in the amount of $15,839,004 for infringement of U.S. Patent No. 4,445,456 ("the '456 patent") by two of Donaldson's products. Engineered Prods. Co. v. Donaldson Co., C98-2106MWB (N.D. Iowa Sept. 23, 2004) ("Amended Judgment"). For its part, EPC conditionally cross-appeals the district court's decisions allowing Donaldson to assert the defense of obviousness-type double patenting, Engineered Prods. Co. v. Donaldson Co., 225 F. Supp. 2d 1069, 1082-86 (N.D. Iowa 2002) ("Summary Judgment II"), and denying EPC's motion to reassert infringement of U.S. Patent No. 4,369,728 ("the '728 patent"), id. at 1131. For the reasons stated herein, we affirm-in-part, reverse-in-part, vacate-in-part, and remand for further proceedings consistent with this opinion.

DISCUSSION

I.

EPC owns the '456 and '728 patents. The patents, both titled "Air Filter Restriction Indicating Device," relate to devices that detect the level of contamination of an air filter of an internal combustion engine. The patents generally claim an indicator device that is comprised of a chamber that is divided by a diaphragm into a first chamber and a second chamber. The first chamber contains an indicating member and is connected to the air flow between an engine's air filter and air intake. The indicating member is in turn attached to the top of the diaphragm. The air pressure in the first chamber decreases as the contamination of the air filter increases, which in turn causes the diaphragm and, thus, the indicating member, to move upward in the chamber. A transparent wall of the chamber allows an individual to see the position of the indicating member within the chamber and thereby gauge the contamination level of the air filter in order to determine whether it is in need of replacement. See generally '456 patent, col. 3, l. 33 to col. 5, l. 2; id. claim 1, col. 6, l. 38 to col. 7, l. 55; '728 patent, claim 1, col. 5, l. 66 to col. 7, l. 33.

An important feature of the device is its "lock-up means," which is comprised in part of a "locking member." The lock-up means allows the locking member to only move in one direction within the chamber, i.e., the direction in which the diaphragm moves as the pressure in the first chamber decreases. This is important because, without the lock-up means, the indicating member would return to its original position at the bottom of the chamber when the engine was turned off. The lock-up means therefore allows an individual to monitor the air filter's contamination when the engine is on or off. The lock-up means also makes the indicator a "progressive indicator" in that it provides information as to the degree of contamination of the air filter. See '456 patent, col. 5, ll. 3-31. Finally, the claimed device also has a "means for selectively disengaging" the lock-up means. This allows an operator to reset the indicator after, for example, a new air filter is installed. See id. col. 5, l. 36 to col. 6, l.18.

EPC initially sued Donaldson for infringement of the '456 and '728 patents.¹ EPC specifically accused two of Donaldson's products, the Air Alert and the NG Air Alert, of infringing one or more claims of the patents. However, EPC and Donaldson subsequently entered into a joint stipulation in which EPC agreed to dismiss its infringement claims under the '728 patent. EPC's stipulation was based at least in part on Donaldson's concession of infringement of the '456 patent by the Air Alert. Donaldson also agreed to drop its claim of invalidity of the '728 patent. The district court thereafter dismissed EPC's infringement claim under the '728 patent with prejudice, along with "any other claims or defenses of either party to the extent they rely upon the '728 patent." Engineered Prods. Co. v. Donaldson Co., 165 F. Supp. 2d 836, 841 n.1 (N.D. Iowa 2001) ("Summary Judgment I").

The court subsequently denied EPC's motion for summary judgment of infringement of the '456 patent by the NG Air Alert and also denied the parties' cross-motions for summary judgment on Donaldson's defense of invalidity of the '456 patent by reason of the on-sale or public-use bars of 35 U.S.C. § 102(b). Id. at 885. Therefore, the main issues remaining for trial were EPC's claim that the NG Air Alert infringed the '456 patent, EPC's claim that infringement by the Air Alert was willful, and Donaldson's allegation that the '456 patent was invalid under the on-sale and public-use bars of 35 U.S.C. § 102(b). However, about one month before trial, Donaldson moved for summary judgment of invalidity of the '456 patent based on a newly asserted theory of obviousness-type double patenting over the '728 patent. EPC argued that the defense was untimely and prejudicial and should not be allowed. The district court disagreed with EPC and allowed Donaldson to assert the defense, though the court ultimately denied Donaldson's motion for summary judgment of invalidity. Summary Judgment II, 225 F. Supp. 2d at 1131.²

A trial was subsequently held in which the jury found that the NG Air Alert infringed claims 2 and 3 of the '456 patent, both literally and under the doctrine of equivalents. The jury also found that infringement by the Air Alert was willful and that claims 2 and 3 were not invalid under the on-sale or public-use bars of 35 U.S.C. § 102(b). As a result, the jury awarded EPC a total of almost $6 million in damages, consisting of $5,269,270 in lost profits caused by Donaldson's sales of the Air Alert (of which $3,826,889 was attributed to lost sales and $1,442,381 was attributed to price erosion) and a reasonable royalty for infringement by the Air Alert and the NG Air Alert.

Both parties then submitted post trial motions. Donaldson reasserted, among other things, its defense of invalidity of the '456 patent by reason of obviousness-type double patenting over the '728 patent. The district court again rejected the defense. Engineered Prods. Co. v. Donaldson Co., 330 F. Supp. 2d 1013, 1022-23 (N.D. Iowa 2004) ("Post-Trial Motions"). EPC in turn moved for, among other things, enhanced damages, pre- and post-judgment interest, and costs and attorney's fees. Id. at 1043 & n.3. The district court granted EPC's motions for enhanced damages, pre- and post-judgment interest, and costs and attorney's fees. Engineered Prods. Co. v. Donaldson Co., 335 F. Supp. 2d 973, 988-89 (N.D. Iowa 2004) ("Attorney's Fees"); Post-Trial Motions, 330 F. Supp. 2d at 1048-49. In an amended judgment, the district court ultimately awarded EPC $15,807,810 in trebled damages for infringement by the Air Alert, $31,194 as a reasonable royalty for infringement by the NG Air Alert,³ and, finally, pre- and post-judgment interest. Amended Judgment. In a separate order, the court awarded EPC $1,844,933 in attorney's fees and $132,725.20 in expenses. Attorney's Fees, 335 F. Supp. 2d at 988.

Donaldson subsequently filed a timely appeal to this court and EPC cross appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

II.

We turn first to Donaldson's contention that the NG Air Alert does not, as a matter of law, infringe claims 2 or 3 of the '456 patent. Donaldson makes two primary arguments: (1) that the district court erred in its construction of the limitation "means for selectively disengaging," and (2) that the court erred in applying its construction of the limitation "interengagable notches" to the NG Air Alert. Because we agree with Donaldson that the district court erred in its construction of "means for selectively disengaging," and because we further agree that under the proper construction the NG Air Alert does not infringe as a matter of law, we do not reach Donaldson's second argument.

Claims 2 and 3 of the '456 patent are dependent upon claim 1. Therefore, both contain the limitation "means for selectively disengaging the interengagable notches so as to permit the diaphragm to return to its infold position when the vacuum in the first chamber is relatively low." The limitation is in means-plus-function form. Accordingly, in construing it, we must "first . . . identify the claimed function and then . . . determine the structure in the specification that corresponds to that function." Frank's Casing Crew & Rental Tools, Inc. v. Weatherford Int'l, Inc., 389 F.3d 1370, 1376 (Fed. Cir. 2004). "A structure disclosed in the specification qualifies as `corresponding' structure only if the specification or prosecution history clearly links or associates that structure to the function recited in the claim." Default Proof Credit Card Sys., Inc. v. Home Depot U.S.A., Inc., 412 F.3d 1291, 1298 (Fed. Cir. 2005).

The district court identified the function of the limitation at issue as "selectively disengaging the interegagable notches so as to permit the diaphragm to return to its infold position when the vacuum in the first chamber is relatively low." Summary Judgment I, 165 F. Supp. 2d at 878-79. The court then identified the corresponding structure as the "button," stating that it "receives and transfers forces which overcome the reset button spring and move the locking member away from its engaged position so that the coiled compression spring can then push the diaphragm back to its infold position." Id. at 880. The court rejected Donaldson's argument that the corresponding structure must also include the flange. In doing so, the court stated that the flange of the locking member was identified as performing a "pivoting function." Consequently, the court...