Vehicular Technologies Corp. v. Titan Wheel Intern., Inc.

• Decision Date: 07 April 1998
• Docket Number: No. 96-1557,96-1557
• Parties: VEHICULAR TECHNOLOGIES CORPORATION, Plaintiff-Appellee, v. TITAN WHEEL INTERNATIONAL, INC., Dyneer Corporation, Transamerica Auto Parts Company, Inc. and Leon Rosser Auto Service, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1084

141 F.3d 1084

46 U.S.P.Q.2d 1257

VEHICULAR TECHNOLOGIES CORPORATION, Plaintiff-Appellee, v. TITAN WHEEL INTERNATIONAL, INC., Dyneer Corporation Transamerica Auto Parts Company, Inc. and Leon Rosser Auto Service, Inc., Defendants-Appellants.

No. 96-1557.

United States Court of Appeals Federal Circuit.

April 7, 1998.

Ronald L. Johnston, Blanc Williams Johnston & Kronstadt, LLP, Los Angeles, CA, argued for plaintiff-appellee.

Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Washington, DC, argued for defendants-appellants. With him on the brief were Barbara C. McCurdy, J. Michael Jakes, and Richard L. Rainey.

Before NEWMAN, PLAGER, and CLEVENGER, Circuit Judges.

Opinion for the court filed by Circuit Judge CLEVENGER. Dissenting opinion filed by Circuit Judge NEWMAN.

CLEVENGER, Circuit Judge.

In this patent infringement action relating to automotive locking differentials, the United States District Court for the Central District of California granted a preliminary injunction to Vehicular Technologies Corporation (PowerTrax). The court's order, based on infringement under the doctrine of equivalents, enjoined Titan Wheel International, Inc., Dyneer Corp., Transamerica Auto Parts Co., Inc., and Leon Rosser Auto Service, Inc. (collectively Tractech), from making, using, or selling allegedly infringing differentials, and ordered a recall of all differentials in the possession of Tractech's distributors. Having previously stayed the preliminary injunction pending appeal, we now decide that the district court erred in concluding that PowerTrax had a reasonable likelihood of success in establishing infringement under the doctrine of equivalents. We therefore vacate the grant of a preliminary injunction and remand.

I

PowerTrax is the assignee of U.S. Patent No. 5,413,015 (the '015 patent). PowerTrax and Tractech compete in the market for automatic locking differentials for use in automotive vehicles. An automotive axle is typically split into two half-axles with a differential located between the two half-axles. The differential allows the wheels on opposite sides of the vehicle to spin at different rates (for example, while the vehicle is rounding a corner). A normal open differential applies equal torque to each wheel, which can create a problem when a wheel encounters icy conditions. Because the wheel on ice needs very little torque before it spins, that same low torque is delivered to the other wheel. Even if the other wheel has traction, it may not receive enough force to move the vehicle, and the vehicle will be stuck, requiring engine revving, rocking, pushing, or towing to get moving.

A locking differential is one type of device that addresses this torque transfer problem. When one wheel slips, a locking differential shifts all of the available drive force to the wheel that has traction. A locking differential accomplishes this feat with two sets of toothed rotating clutch plates: a set of drive plates and a set of driven plates. An exploded view of a locking differential that is representative of the prior art, as depicted by consent of the parties in Exhibit C at page A1134 of the appellate joint appendix, is pictured below:

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In this locking differential, the drive plates (referred to as "Drivers" in the figure) are mounted back-to-back with their toothed surfaces facing outward. Under the force from multiple bias springs, the drive plates push away from each other and against the toothed surfaces of the driven plates (referred to as "Couplers" in the figure), which are attached to each half-axle of the vehicle. In the prior art, as pictured, each bias spring had one end fitted into a hole (not shown) in the back of a drive plate and an opposite end in contact with a thin disk (referred to as a "Disc" in the figure). The disk in turn contacted a stop pin inserted in a corresponding hole (not shown) in the back of the other drive plate. The holes held the spring and pin in place, and the disk helped the spring to rest properly against the end of the pin. Thus, multiple spring-disk-pin assemblies located between the drive plates and near the plates' edges coupled the opposing inner surfaces of the drive plates to each other and provided a biasing force which pushed the drive plates apart.

The spring-disk-pin design of the prior art created special installation problems. Many locking differentials are designed as after-market add-ons whose parts can be installed into an existing differential by a do-it-yourself backyard mechanic. However, there is very little space inside a differential to install all the parts. With the spring-disk-pin design, each small part had to be carefully inserted in the tight space between the drive plates and then repositioned, often using a prying tool and a hacksaw blade to hold the parts in place and the spring in a compressed position. The disks were particularly troublesome because they slid around on the end of the spring and often fell off or were lost during installation.

The '015 patent is directed toward an improved locking differential whose parts are easier to manufacture, install, and maintain than those of prior art locking differentials. The application for the '015 patent, filed June 28, 1993, and listing John Zentmyer (Zentmyer) as the inventor, focused on three main improvements: (1) window openings in the outside rims of the drive plates, (2) newly designed spring assemblies that use two concentric coil springs and a pin rather than a spring-disk-pin grouping, and (3) spring passageways with oblong cross-sections. The focus of this appeal is on the patent's replacement of the spring-disk-pin grouping with two concentric springs.

In the patented device, the pins are inserted in the holes in the back of the drive plates before the drive plates are mounted in the differential case. After the drive plates are in place, the pins are slid into position and a spring is compressed and inserted through each window opening into the spring hole at the end of each pin. The windows permit easier installation, and the substitution of an inner spring for the old disk eliminates the problem of lost disks. The inner spring also creates a surface for the pin to ride on, thereby functioning like the eliminated disk. Finally, the inner spring produces extra biasing force in addition to that provided by the outer spring and serves as a backup if the outer spring should break.

PowerTrax introduced the new design in 1993 as the Lock-Rite locking differential, two years before the '015 patent issued. Tractech reverse-engineered the Lock-Rite and copied the design into a product known as the E-Z Locker. At an October 1995 industry trade show where Tractech introduced the E-Z Locker, PowerTrax first notified Tractech of the '015 patent and its belief that the E-Z Locker infringed the patent. Tractech's Director of Engineering, working from the trade show and with assistance from Tractech's patent counsel, immediately developed two modifications of the E-Z Locker. First, he replaced the inner spring of the two spring assembly with a single spring and a plug stuck in one end of the spring. Second, he eliminated small holes around the periphery of the drive plates that led to the pin passageways.

The spring assemblies of the prior art, Fig. 5 of the '015 patent, and the accused E-Z Locker device, as respectively depicted by consent of the parties in Exhibits C, A, and O, at pages A1134, A1513, and A1715 in the appellate joint appendix, are shown below:

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On March 1, 1996, PowerTrax sued Tractech for patent infringement, trade dress infringement, misappropriation of trade secrets, breach of contract, and promissory estoppel. PowerTrax filed a motion for a preliminary injunction on all of its claims, but restricted its infringement argument to infringement under the doctrine of equivalents. Limiting its ruling to the patent infringement claim, the district court granted PowerTrax's motion and issued a preliminary injunction. The injunction enjoined Tractech from making, using or selling, or causing to be made, used, or sold, Tractech's E-Z Locker locking differential, any automatic positive locking differential mechanism substantially similar or otherwise equivalent to PowerTrax's Lock-Right locking differential, or any product that infringes the '015 patent. It also ordered Tractech to "recall all E-Z Locker products in the possession of its distributors." This court stayed the preliminary injunction pending this appeal, over which we have jurisdiction pursuant to 28 U.S.C. § 1292(c)(1) (1994).

II

"The grant or denial of a preliminary injunction pursuant to 35 U.S.C. § 283 is within the discretion of the district court." Novo Nordisk of N. Am. v. Genentech, Inc., 77 F.3d 1364, 1367, 37 USPQ2d 1773, 1775 (Fed.Cir.1996) (Novo Nordisk I ). "An abuse of discretion may be established by showing that the court made a clear error of judgment in weighing relevant factors or exercised its discretion based upon an error of law or clearly erroneous factual findings." Id.

As the moving party, PowerTrax had to establish its right to a preliminary injunction in light of four factors: (1) a reasonable likelihood of success on the merits; (2) the irreparable harm if preliminary relief is not granted; (3) the balance of hardships tipping in its favor; and (4) the impact of the injunction on the public sector. Reebok Int'l Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1555, 31 USPQ2d 1781, 1783 (Fed.Cir.1994). PowerTrax had to establish both of the first two factors, i.e., likelihood of success and irreparable harm, to receive a preliminary injunction. Id. To establish a likelihood of success on the merits, PowerTrax must show that, in light of the presumptions and burdens that will inhere at trial on the merits, (1...