Engel Industries, Inc. v. Lockformer Co.

• Citation: 166 F.3d 1379,49 USPQ2d 1618
• Decision Date: 03 February 1999
• Docket Number: Nos. 98-1294,98-1295,s. 98-1294
• Parties: ENGEL INDUSTRIES, INC., Plaintiff-Appellant, v. The LOCKFORMER COMPANY, Iowa Precision Industries, Inc., and Met-Coil Systems Corporation, Defendants/Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1379

166 F.3d 1379

49 U.S.P.Q.2d 1618

ENGEL INDUSTRIES, INC., Plaintiff-Appellant, v. The LOCKFORMER COMPANY, Iowa Precision Industries, Inc., and Met-Coil Systems Corporation, Defendants/Cross-Appellants.

Nos. 98-1294, 98-1295.

United States Court of Appeals Federal Circuit.

Feb. 3, 1999.

Melvin L. Moser, Gorr, Moser, Dell & Loughney, of Pittsburgh, Pennsylvania, argued for plaintiff-appellant. With him on the brief were George Raynovich, Jr., and Scott A. Matthews.

Theodore A. Breiner, Breiner & Breiner, of Alexandria, Virginia and Glenn L. Johnson, of Shuttleworth & Ingersoll, P.C., of Cedar Rapids, Iowa, argued for defendants/cross appellants. With them on the brief was A.W. Breiner, of Breiner & Breiner.

Before MAYER, Chief Judge, ARCHER, Senior Circuit Judge, and CLEVENGER, Circuit Judge.

CLEVENGER, Circuit Judge.

In these cross-appeals, Engel asks this court to reverse the dismissal of its motion for a refund of payments made pursuant to a patent license, where Engel was found to not infringe the patent. Lockformer, Iowa Precision Industries, and Met-Coil Systems seek reversal of the lower court's refusal to grant them relief from the judgment of noninfringement under Rule 60(b)(3) of the Federal Rules of Civil Procedure. See Engel, Inc. v. Lockformer Co., No. 4:86CV212, slip op. at 1 (E.D.Mo. Mar. 2, 1998) (denying refund of payments); Engel, Inc. v. Lockformer Co., No. 4:86CV212, slip op. at 1 (E.D.Mo. Mar. 2, 1998) (denying Rule 60(b)(3) motion). Because the district court correctly held that it lacked jurisdiction to consider Engel's refund request, and correctly found no basis for Lockformer et al. to be relieved from judgment, we affirm.

I

This dispute between manufacturers of metal duct systems makes its fourth appearance at this court. See Engel Indus., Inc. v. Lockformer Co., 96 F.3d 1398, 40 USPQ2d 1161 (Fed.Cir.1996) ("Engel III "), Engel Indus., Inc. v. Lockformer Co., 22 F.3d 1105 (Fed.Cir.1994) (Table) ("Engel II "), Engel Indus., Inc., v. Lockformer Co., 946 F.2d 1528, 20 U.S.P.Q.2d 1300 (Fed.Cir.1991) ("Engel I "). The origins of the conflict can be traced to a 1985 license agreement between the appellant Engel and the cross-appellants Lockformer, Met-Coil, and Iowa Precision Industries (collectively, "Lockformer"). The 1985 agreement granted Engel a license under Lockformer's U.S. Patent No. 4,466,641 (the '641 patent), relating to a duct connecting system used in the heating, ventilating and air conditioning ("HVAC") industry. Before signing the agreement, during negotiations of the agreement, and after signing the agreement, Engel asserted that its competing duct connecting system did not infringe the '641 patent, a position memorialized by the agreement's statement that "Engel denies[ ] that the use of certain of Engel's machines infringe said patent." Nonetheless, Engel signed the agreement, in which Lockformer agreed to release Engel and its customers from all liability under the '641 patent.

In 1986, Engel instituted a declaratory judgment action against Lockformer, asserting that the '641 patent was invalid, that the Engel products did not infringe, that the license agreement was unlawful, and that therefore Engel should be relieved from paying royalties under the agreement. After protracted litigation, including three separate appeals to the Federal Circuit, Engel prevailed on its assertion of noninfringement, although both the '641 patent and the license agreement were found valid. In Engel III, the Federal Circuit provided what appeared to be the last word on the case, holding that Engel's products did not infringe the '641 patent either literally or under the doctrine of equivalents, and that the 1985 license agreement was not an unlawful misuse of patent rights. See Engel III, 96 F.3d at 1406, 1407, 1409, 40 USPQ2d at 1166, 1167, 1168. The judgment of the district court was affirmed-in-part and reversed-in-part without being remanded. See id. at 1409, 40 USPQ2d at 1168.

On January 15, 1997, Engel filed a paper with the district court entitled "Motion for Entry of Final Judgment in Accordance with the Federal Circuit Opinion and Mandate," arguing that it was entitled under the Engel III decision to a reimbursement of royalty payments made after the filing of the declaratory judgment. In September 1997, Lockformer filed a motion for relief from judgment in which it asserted that Engel engaged in misconduct at trial and on appeal by misrepresenting material facts relating to infringement and that therefore Lockformer was entitled to relief from the judgment under Federal Rule of Civil Procedure 60(b)(3) and a new trial.

The district court denied both motions. It held that it lacked jurisdiction to consider Engel's request for repayment because, inter alia, the issue was implicitly decided by the Federal Circuit in Engel III without remand. See Engel, No. 4:86CV212, slip op. at 14-15 (denying refund of payments). The district court alternatively held that Engel would not in any event be entitled to a refund, refusing to extend the rule of Lear v. Adkins, 395 U.S. 653, 89 S.Ct. 1902, 23 L.Ed.2d 610, 162 USPQ 1 (1969), as holding that the law entitles a licensee to recoup royalties paid to a patent owner after a determination that the licensee has not infringed the patent. See Engel, No. 4:86CV212, slip op. at 19 (denying refund of payments). The lower court denied Lockformer's Rule 60(b)(3) motion on the grounds that Lockformer had not met its burden of demonstrating that Engel engaged in fraud or misrepresentation. See Engel, No. 4:86CV212, slip op. at 12 (denying Rule 60(b)(3) motion). These appeals followed. We have jurisdiction under 28 U.S.C. § 1295(a)(1) (1994).

II

The resolution of Engel's appeal turns on whether the Engel III mandate left open for further adjudication the question of whether Engel was entitled to recoup royalty payments from Lockformer by virtue of the finding of noninfringement. For "[w]hile a mandate is controlling as to matters within its compass, on the remand a lower court is free as to other issues." Sprague v. Ticonic Nat'l Bank, 307 U.S. 161, 168, 59 S.Ct. 777, 83 L.Ed. 1184 (1939) (citing In re Sanford Fork & Tool Co., 160 U.S. 247, 256, 16 S.Ct. 291, 40 L.Ed. 414 (1895)); § ee also Laitram Corp. v. NEC Corp., 115 F.3d 947, 951, 42 USPQ2d 1897, 1900 (Fed.Cir.1997) ("Upon return of its mandate, the district court cannot give relief beyond the scope of that mandate, but it may act on matters left open by the mandate.") (citations and quotations omitted). The district court found that the Engel III court, by explicitly affirming the validity of the license agreement, implicitly decided that Engel did not have a right to seek a refund of payments under the agreement. See Engel, No. 4:86CV212, slip op. at 14 (E.D.Mo. Mar. 2, 1998) (denying refund of payments). Hence, because the Engel III judgment did not return the mandate to the district court on that issue, see Engel III, 96 F.3d at 1409, 40 USPQ2d at 1168, the district court determined that it was prevented from considering Engel's motion. See Engel, No. 4:86CV212, slip op. at 15 (E.D.Mo. Mar. 2, 1998) (denying refund of payments).

Engel argues that it did not appeal the issue of whether it was entitled to a refund of royalty payments, and thus the question could not have been resolved against it by this court in Engel III. That is, Engel asserts that the Engel III mandate did not speak to the recoupment issue, and thus the district court retains jurisdiction to hear its motion. See Sprague, 307 U.S. at 168, 59 S.Ct. 777, Laitram, 115 F.3d at 951, 42 USPQ2d at 1900. It is undisputed that Engel did not argue to the Engel III court that it was entitled to a refund. The ramifications of this fact are the subject of this dispute. Engel argues that the absence of argument on a refund of royalty payments demonstrates that the issue was not appealed and therefore not decided. The district court found that, to the extent the absence of argument was significant, it demonstrated that Engel waived the issue. See Engel, No. 4:86CV212, slip op. at 13 (denying refund of payments).

We review the interpretation of our own mandate de novo. Laitram, 115 F.3d at 950, 42 USPQ2d at 1899.

A

We begin by noting that the Engel III court did not order a remand on any of the issues presented on appeal. See 96 F.3d at 1409, 40 USPQ2d at 1168 (judgment affirming-in-part, reversing-in-part, without remanding). Therefore the scope of the Engel III mandate, and thus the scope of the matters removed from the district court's jurisdiction, see Sprague, 307 U.S. at 168, 59 S.Ct. 777, Laitram, 115 F.3d at 951, 42 USPQ2d at 1900, is coterminous with the scope of the issues deemed presented to the court on appeal. See Sprague, 307 U.S. at 168, 59 S.Ct. 777 (finding that lower court had jurisdiction to consider issue "neither before the [lower court] nor before this Court."), Exxon Chem. Patents, Inc., v. Lubrizol Corp., 137 F.3d 1475, 1484, 45 USPQ2d 1865, 1867 (Fed.Cir.1998) (issues not before lower court are not waived by failure to appeal). That is, because the Engel III judgment disposed of the appealed issues without the necessity of remand, all such appealed issues are withheld from further consideration by the district court, as they are included within the Engel III mandate.

The scope of the issues presented to this court on appeal must be measured by the scope of the judgment appealed from, see Sprague, 307 U.S. at 168, 59 S.Ct. 777; Laitram, 115 F.3d at 951, 42 USPQ2d at 1900, not by the arguments advanced by the appellant. To hold otherwise would allow appellants to present appeals in a piecemeal and repeated fashion, and would lead to the untenable result that "a party who has chosen not to argue a point on a first appeal should stand better as regards the law of the case than one who had argued and lost." Fogel v. Chestnutt, 668 F.2d 100, 109 (2d Cir.1981). As an appellate court, we have...