ZUP, LLC v. Nash Mfg., Inc.

896 F.3d 1365

ZUP, LLC, Plaintiff-Appellant

v.NASH MANUFACTURING, INC., Defendant-Appellee

2017-1601

United States Court of Appeals, Federal Circuit.

Decided: July 25, 2018

Matthew Michael Wawrzyn, Wawrzyn & Jarvis LLC, Glenview, IL, argued for plaintiff-appellant.

Joseph F. Cleveland, Jr., Brackett & Ellis, Fort Worth, TX, argued for defendant-appellee.

Before Prost, Chief Judge, Newman and Lourie, Circuit Judges.

Dissenting opinion filed by Circuit Judge Newman.

Prost, Chief Judge.

Appellant ZUP, LLC ("ZUP") appeals the decision of the United States District Court for the Eastern District of Virginia, which granted summary judgment in favor of Appellee Nash Manufacturing, Inc. ("Nash"). The district court invalidated claims 1 and 9 of U.S. Patent No. 8,292,681 ("the '681 patent") as obvious and, in the alternative, held that Nash does not infringe claim 9. We affirm the district court’s holding that claims 1 and 9 are invalid as obvious and do not reach the infringement question.

I

ZUP and Nash are competitors in the water recreational device industry. Nash has been a part of the industry for over fifty years and has designed and manufactured water skis, knee boards, wake boards, and other similar recreational devices. Meanwhile, ZUP is a relative newcomer to the industry, having entered the market in 2012 with its "ZUP Board." The ZUP Board is designed to assist riders who have difficulty pulling themselves up out of the water into a standing position while being towed behind a motorboat.

A

ZUP owns the '681 patent, which includes twelve claims. Generally, the claims of the '681 patent cover a water recreational board and a method of riding such a board in which a rider simultaneously uses side-by-side handles and side-by-side foot bindings to help maneuver between various riding positions. According to the patent, this allows a rider to more readily move from lying prone, to kneeling, to crouching, and then to standing.

Claims 1 and 9 of the '681 patent are at issue in this case. Claim 1 states:

1. A water recreation device comprising:

a riding board having a top surface, a bottom surface, a front section, a middle section, and a rear section;

a tow hook disposed on the front section of the riding board;

first and second handles disposed side-by-side on the front section of the top surface of the riding board aft of the tow hook;

first and second foot bindings disposed side-by-side on the middle section of the top surface of the riding board aft of the first and second handles; and

a plurality of rails protruding from the bottom surface of the riding board and extending substantially the full length of the riding board;

wherein the tow hook includes a rearward-facing concave section sized to receive a tow rope bar and positioned to allow the riding board to be pulled in a forward direction by a tow rope attached to the tow rope bar,wherein the first and second handles and the first and second foot bindings are configured for simultaneous engagement by a rider to position the rider in a crouching stance facing in a forward direction,

wherein the plurality of rails are disposed relative to a longitudinal axis along the bottom surface of the riding board, the longitudinal axis projecting rearwardly from a reference location substantially central to the front section, and each of the plurality of rails is laterally spaced closer to the longitudinal axis nearest the rear section of the riding board than the each of the plurality of rails is laterally spaced from the longitudinal axis nearest the front section of the riding board thereby allowing the water that moves across the bottom surface nearest the front section of the riding board to funnel towards the bottom surface nearest the rear section of the riding board for the purpose of generating lift force against the bottom surface of the riding board.

'681 patent, claim 1. Likewise, claim 9 states:

9. A method of riding a water recreation device on a body of water comprising:

placing a water recreation device into a body of water, the water recreation device comprising:

a riding board having a top surface, a bottom surface, a front section, a middle section, and a rear section;

a tow hook disposed on the front section of the riding board;

first and second handles disposed side-by-side on the front section of the top surface of the riding board aft of the tow hook; and

first and second foot bindings disposed side-by-side on the middle section of the top surface of the riding board aft of the first and second handles;

attaching a tow rope to said tow hook, said tow rope also attached to a water vehicle;

grasping the first and second handles of the water recreation device to establish a prone start position by a rider;

maintaining said prone start position by the rider until the riding board has achieved a substantially parallel position relative to the surface of the water;

achieving a kneeling position by the rider by placing both knees on the top surface of the riding board;

achieving a crouching position by the rider by placing a first foot into the first foot binding and then placing a second foot into the second foot binding;

grasping the tow rope by the rider by releasing the first and second handles;

removing the tow rope from the tow hook by the rider;

standing on the riding board by the rider while continuing to grasp the tow rope.

'681 patent, claim 9.

In sum, claims 1 and 9 contain the following elements: (1) a riding board; (2) a tow hook on the front of the riding board; (3) a plurality of rails on the bottom surface of the riding board; (4) side-by-side handles on the front of the riding board; (5) side-by-side foot bindings on the middle of the riding board; and, at least as stated in claim 1, (6) the ability to simultaneously engage the handles and foot bindings to position the rider in a crouching stance.

B

In 2013, ZUP and Nash began discussions about a potential joint manufacturing venture for the ZUP Board. Their negotiations eventually fell through, and Nash brought the accused product, the "Versa Board," to market in May 2014.

Like the ZUP Board, the Versa Board has a tow hook on the front section of the board. Unlike the ZUP Board, however, the Versa Board has several holes on the top surface of the board that allow users to attach handles or foot bindings in various configurations. See J.A. 427–29. Although Nash warns against having the handles attached to the board while standing, see J.A. 430 ¶¶ 22–23, a user could theoretically ignore Nash’s warnings and attach the handles and foot bindings in a configuration that mirrors the configuration of the ZUP Board, see J.A. 139.

After seeing the Versa Board displayed at a surf expo in 2014, Glen Duff, ZUP’s Chief Innovative Officer and inventor of the '681 patent, approached Keith Parten, Nash’s president, to express concern that the Versa Board infringed the '681 patent. After another failed attempt to secure a partnership with Nash, ZUP turned to litigation.

In its complaint, ZUP alleged: (1) contributory infringement of the '681 patent ; (2) induced infringement of the '681 patent ; (3) trade secret misappropriation under the Virginia Uniform Trade Secrets Act; and (4) breach of contract. Nash counterclaimed, seeking declaratory relief as to non-infringement and invalidity.

The district court granted Nash’s summary judgment motion with respect to invalidity, thus rendering the infringement claims moot. Specifically, the district court held claim 1 obvious over U.S. Patent No. 5,163,860 ("Clark") in view of U.S. Patent No. 6,306,000 ("Parten '000") ; U.S. Patent No. 7,530,872 ("Parten '872") ; U.S. Patent No. 5,979,351 ("Fleischman") ; U.S. Patent No. 5,797,779 ("Stewart") ; and U.S. Patent No. 6,585,549 ("Fryar"). ZUP, LLC v. Nash Mfg., Inc. , 229 F.Supp.3d 430, 446 (E.D. Va. 2017). The district court also held claim 9 obvious over Clark in view of Parten '000, Stewart, and U.S. Patent No. 4,678,444 ("Monreal"). Id. at 447.

Although the district court recognized that its invalidity decision rendered ZUP’s contributory and induced infringement claims moot, id. at 450, it nonetheless conducted an alternative analysis, stating that it would have granted Nash’s summary judgment motion with respect to non-infringement of claim 9, id. at 450–55. Finally, the district court granted summary judgment in Nash’s favor with respect to the non-patent claims. Id. at 455–56.

ZUP timely appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II

We review a grant of summary judgment under the law of the regional circuit. Memorylink Corp. v. Motorola Sols., Inc. , 773 F.3d 1266, 1270 (Fed. Cir. 2014). The Fourth Circuit reviews a grant of summary judgment de novo, using the same standard applied by the district court. Gallagher v. Reliance Standard Life Ins. Co. , 305 F.3d 264, 268 (4th Cir. 2002), as amended (Oct. 24, 2002). Disposition of a case on summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a).

Depending on the record in a particular case, "summary judgment of invalidity for obviousness may be appropriate." Intercont'l Great Brands LLC v. Kellogg N. Am. Co. , 869 F.3d 1336, 1344 (Fed. Cir. 2017). In particular, where "the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors, summary judgment is appropriate." KSR Int'l Co. v. Teleflex Inc. , 550 U.S. 398, 427, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007).

A

The primary issue in this case is whether claims 1 and 9 of the '681 patent are invalid as obvious under 35 U.S.C. § 103(a).¹ Although the "ultimate judgment of obviousness is a legal determination," KSR , 550 U.S. at 427, 127 S.Ct. 1727, it is based on underlying factual inquiries, including (1) the scope and content of the prior art; (2) the differences...