Virginia Panel Corp. v. MAC Panel Co.

• Decision Date: 30 December 1997
• Docket Number: 96-1432,Nos. 96-1416,s. 96-1416
• Citation: 45 USPQ2d 1225,133 F.3d 860
• Parties: VIRGINIA PANEL CORPORATION, Plaintiff/Cross-Appellant, v. MAC PANEL COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 860

133 F.3d 860

45 U.S.P.Q.2d 1225

VIRGINIA PANEL CORPORATION, Plaintiff/Cross-Appellant, v. MAC PANEL COMPANY, Defendant-Appellant.

Nos. 96-1416, 96-1432.

United States Court of Appeals, Federal Circuit.

Dec. 30, 1997.

Rehearing Denied; Suggestion for Rehearing In Banc

Declined Feb. 20, 1998.

Kenneth E. Krosin, Lowe, Price, LeBlanc & Becker, Alexandria, VA, argued for plaintiff-cross-appellant. With him on the brief were Timothy R. DeWitt and Harrie R. Samaras.

Thomas H. Jenkins, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Washington, DC, argued for defendant-appellant. With him on the brief was Michael A. Morin. Of counsel on the brief were C. William Craycroft, McCutchen, Doyle, Brown & Enersen, L.L.P, San Jose, CA. Also on the brief were Dalbert U. Shefte, and Robert J. Walters, Shefte, Pinckney & Sawyer, L.L.P., Charlotte, NC. Of counsel was Gerson S. Panitch, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Washington, DC.

Before LOURIE, Circuit Judge, ARCHER, Senior Circuit Judge, ^* and RADER, Circuit Judge.

LOURIE, Circuit Judge.

MAC Panel Co. (MAC) appeals from the judgment of the United States District Court for the Western District of Virginia holding that MAC infringes U.S. Patent 4,329,005, owned by Virginia Panel Corp. (VP). See Virginia Panel Corp. v. Mac Panel Co., 887 F.Supp. 880 (W.D.Va.1995) (Virginia Panel I ). VP cross-appeals from the Virginia Panel I decisions to enhance damages for infringement by only ten percent and not to award attorney fees, and from the Virginia Panel Corp. v. Mac Panel Co., Civ. A. No. 93-0006-H, 1996 WL 335381 (W.D.Va. May 29, 1996) (Virginia Panel II ) decisions that VP engaged in patent misuse and violated the antitrust laws. Because the district court's error in submitting the construction of the '005 patent's claim language "reciprocating slide plates" to the jury was harmless and because the district court did not abuse its discretion by enhancing damages by only ten percent and refusing to award attorney fees, we affirm the Virginia Panel I decisions. However, because the district court erred in declining to grant judgment as a matter of law to VP on the patent misuse and antitrust claims, we reverse the Virginia Panel II decisions that VP engaged in patent misuse and violated the antitrust laws. We also modify the judgment to correct a plainly inadvertent error of the district court.

BACKGROUND

VP owns the '005 patent, which is directed to a mechanism invented by VP employees for engaging an "interchangeable test adapter" (ITA) and a "receiver." As explained in the written description portion of the patent specification, ITAs and receivers are typically the two primary components of Automatic Test Equipment (ATE) used for the diagnostic testing of systems having thousands of electronic connections, such as airplane black boxes. To achieve a suitable precision engagement between the electrical contacts of the ITA and those of the receiver, the claimed mechanism requires that the ITA be suspended from "fixed hanger plates" on opposite 1. A mechanism for positioning a test adaptor in operative relationship with a receiver comprising [a] a receiver body,

sides of the receiver. Furthermore, the contacts of the ITA must be drawn into contact with the receiver contacts through "reciprocating" movement of "slide plates" relative to the hanger plates. Claim 1, which is the broadest independent claim at issue, reads as follows:

[b] fixed hanger plates on opposite sides of the receiver body having spaced guide slots which are parallel and whose axes are normal to an electrical contact plane of the receiver,

[c] reciprocating slide plates on opposite sides of the receiver body extending adjacent to the fixed hanger plates and having spaced profiled cam slots including entrance positions parallel to said straight slots and adapted in one position of the slide plates to register with entrance portions of the straight slots,

[d] manually operable means on the receiver body to reciprocate said slide plates in unison relative to the fixed hanger plates between test adapter release and locking positions,

[e] a test adaptor including side members and pairs of spaced projecting locator elements on the side members ..., and

[f] said projecting locator elements each comprising a pair of side-by-side independent rollers....

(emphasis and paragraphing added).

MAC, VP's sole competitor in the relevant ATE market, makes an ITA/receiver interface which uses a "rotating latch mechanism" to push the ITA into contact with the receiver and to achieve proper alignment between the components' electrical contacts. After it became apparent that MAC was making significant inroads into VP's share of the ATE market in the mid-1980s and early 1990s, VP launched what it called a "Big MAC Attack." Apparently as part of this "attack," VP notified MAC's customers (including a number of government contractors and agencies) that it believed that certain MAC ITAs infringed the '005 patent, asked them to "cease and desist in using and selling such infringing items" and either implicitly or explicitly threatened suit. VP also notified its own customers, both old and new, that warranty service for VP parts would not be extended to VP parts that had been used with non-VP components. At about the same time, during contract negotiations with ASCOR, one of MAC's customers, VP proposed an exclusive license agreement under the '005 patent in which ASCOR would agree to purchase all ATE components, including a number of unpatented components, from VP, not MAC. Apparently on the advice of counsel, VP never entered into this agreement. In 1988, to further strengthen its market position, VP also became the sole source subcontractor under GE/Martin Marietta's Consolidated Automated Support System (CASS) Test Program Sets contract with the Navy.

In 1993, VP filed suit asserting that MAC willfully infringed the '005 patent (as well as U.S. Patent 4,655,530, which is not at issue in this appeal) and that MAC violated 15 U.S.C. § 1125(a) (1994), Lanham Act § 43(a), by falsely advertising that it had qualified as a supplier under the CASS contract. MAC defended on numerous grounds including invalidity and unenforceability, based on asserted misuse of the '005 patent; MAC also asserted antitrust and state false advertising counterclaims based in large part on VP's above-mentioned conduct. Following the parties' pre-trial motions, the district court granted summary judgment that MAC did not literally infringe the '005 patent, concluding that the "fixed hanger plate" limitation was not literally met. The court then bifurcated the proceedings into a standard "infringement" trial, in which infringement under the doctrine of equivalents was tried, and an "antitrust" trial. In the latter trial, both MAC's patent misuse defense and its antitrust counterclaims were tried, along with the parties' unfair competition and state false advertising claims.

In the infringement trial, the court submitted the question of the construction of "reciprocating slide plates" to the jury, which rendered a general verdict of contributory infringement and also found willfulness. The jury awarded approximately $1.2 million In the antitrust trial, a different jury found that VP had misused the '005 patent and had violated both federal antitrust law and state false advertising law, and that MAC had not violated § 1125(a). In view of VP's misuse, the court vacated the infringement damages award. However, based on its finding that VP had purged its misuse by ceasing the above-mentioned practices and that the detrimental effects of VP's misuse had been dissipated, the court enjoined MAC's future manufacture, use, or sale of the receivers and ITAs adjudged to infringe the '005 patent and the modules adjudged to infringe the '530 patent, "for commercial non-governmental purposes." Virginia Panel II, 1996 WL 335381, at * 11. The court then awarded MAC $456,666 in trebled antitrust damages, in addition to $913,332 in attorney fees and $157,928 in costs, but denied MAC's motion for future antitrust damages related to its loss of prospective CASS sales. See id. at * 12-* 13.

in damages for infringement of the '005 patent and $20,300 for infringement of the '530 patent. The court reduced the damages based on an implied license, and decided to enhance damages by only ten percent; it declined to award VP attorney fees. See Virginia Panel I, 887 F.Supp. 880, 884-85 (1995).

MAC appeals from the judgment that it infringed the '005 patent. ¹ VP cross-appeals from the decisions to enhance damages by only ten percent and not to award attorney fees, as well as from the decisions that it engaged in patent misuse and violated the antitrust laws. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1) (1994).

DISCUSSION

A. Infringement

We first address MAC's appeal from the decision that its sales of interface devices with a rotating latch mechanism constitute contributory infringement of the '005 patent. Prior to the infringement trial, the district court judge granted summary judgment that the MAC interface devices do not have "fixed hanger plates" and therefore do not literally infringe the patent. At trial, however, VP argued that the MAC devices infringe under the doctrine of equivalents because those devices (1) employ an equivalent of the claimed "fixed hanger plates" and (2) literally meet every other limitation, including the "reciprocating slide plates" limitation. The district court submitted to the jury, inter alia, the issue of the interpretation of the term "reciprocating slide plates." The jury rendered a general verdict of infringement of both the '005 and '530 patents one month prior to the issuance of our decision in Markman v. Westview Instruments, Inc., 52 F.3d 967, 34 USPQ2d 1321 (Fed.Cir.1995) (in banc), aff'd, 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577, 38 USPQ2d 1461 (1996), in which we held...