Grain Processing Corp. v. American Maiz

Citation185 F.3d 1341,51 USPQ2d 1556
Decision Date04 August 1999
Docket NumberMAIZE-PRODUCTS
Parties(Fed. Cir. 1999) GRAIN PROCESSING CORPORATION, Plaintiff-Appellant, v. AMERICANCOMPANY, Defendant-Appellee. 98-1081 DECIDED:
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Geoffrey G. Gilbert, Mcbride, Baker & Coles, of Chicago, Illinois, argued for plaintiff-appellant. With him on the brief was Marc L. Fogelberg.

Robert L. Baechtold, Fitzpatrick, Cella, Harper & Scinto, of New York, New York, argued for defendant-appellee. With him on the brief were Nicholas N. Kallas and Dominick A. Conde.

Before RADER, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and BRYSON, Circuit Judge.

RADER, Circuit Judge.

The United States District Court for the Northern District of Indiana denied Grain Processing Corporation lost profits for American Maize-Products' infringement of U.S. Patent No. 3,849,194 (the '194 patent). Grain Processing Corp. v. American Maize-Products Co., 979 F. Supp. 1233, 44 USPQ2d 1782 (N.D. Ind. 1997) (Grain Processing VIII). The district court instead awarded Grain Processing a 3% royalty on American Maize's infringing sales. Id.; see also Grain Processing Corp. v. American Maize-Products Co., 893 F. Supp. 1386, 1396, 37 USPQ2d 1299, 1307 (N.D. Ind. 1995) (Grain Processing VI), rev'd, Nos. 95-1506, 95-1507, 108 F.3d 1392, 1997 WL 71726 (Fed. Cir. Feb. 20, 1997) (nonprecedential) (Grain Processing VII).

The district court found that American Maize proved that a noninfringing substitute was available, though not on the market or for sale, during the period of infringement. The court found further that this substitute was acceptable to all purchasers of the infringing product and concluded that American Maize rebutted the inference of "but for" causation for Grain Processing's alleged lost sales. Upholding the district court's findings and conclusions, this court affirms.

I.

This appeal culminates the lengthy and complex history of this case, spanning more than eighteen years and eight prior judicial opinions, three by this court. The patent featured in this infringement suit involves maltodextrins, a versatile family of food additives made from starch. Commercial food manufacturers purchase hundreds of millions of pounds of maltodextrins annually from producers such as Grain Processing and American Maize.

Maltodextrins serve well as food additives because they are bland in taste and clear in solution. They do not affect the natural taste or color of other ingredients in food products. Maltodextrins also improve the structure or behavior of food products. For instance, they inhibit crystal growth, add body, improve binding and viscosity, and preserve food properties in low temperatures. Consequently, food manufacturers use maltodextrins in a wide variety of products such as frostings, syrups, drinks, cereals, and frozen foods.

Maltodextrins belong to a category of chemical products known as "starch hydrolysates." Producers make starch hydrolysates by putting starch through hydrolysis, a chemical reaction with water. Hydrolysis breaks down the starch and converts some of it to dextrose.1 With adjustments, this process yields more dextrose. For instance, additional enzymes, time extensions, and increases in temperature or pH enhance the reaction. After hydrolysis, the producer typically refines, spray-dries, and packages the starch hydrolysate for sale in powder form.

Maltodextrins are starch hydrolysates that have a "dextrose equivalence" of less than 20. Dextrose equivalence (D.E.) is a percentage measurement of the "reducing sugars content" of the starch hydrolysate. D.E. reflects the degree to which the hydrolysis process broke down the starch and converted it into dextrose. Converting more starch into dextrose increases the D.E. of the resulting starch hydrolysate. Hence, pure starch has a D.E. of zero, pure dextrose a D.E. of 100. The D.E. value indicates functional properties of a maltodextrin. A 15 D.E. maltodextrin, for example, is slightly sweeter and more soluble than a 5 D.E. maltodextrin. On the other hand, the 5 D.E. maltodextrin has more prevalent binding, bodying, and crystal inhibiting properties.

Grain Processing is the assignee of the '194 patent, "Low D.E. Starch Conversion Products," which claims maltodextrins with particular attributes, and processes for producing them. The claimed invention represents improvements in the "heavily explored" field of starch hydrolysates. See Grain Processing Corp. v. American Maize-Products Co., No. 81-0237, slip op. at 1 (N.D. Ind. March 16, 1987) (Grain Processing I), rev'd, 840 F.2d 902, 5 USPQ2d 1788 (Fed. Cir. 1988) (Grain Processing II). Claim 12, the sole claim on appeal, reads:

12. A waxy starch hydrolysate having

a dextrose equivalent value between about 5 and about 25;

a descriptive ratio greater than about 2, said descriptive ratio being the quotient obtained by dividing the sum of the percentage of saccharides, dry basis, having a degree of polymerization of 1 to 6, by the dextrose equivalent value;

a monosaccharide content in the range of from about 0.1 percent by weight, to about 2.4 percent by weight, dry basis;

a dissaccharide content in the range of from about 1.3 percent to about 9.7 percent, by weight, dry basis; and

being further characterized as capable of producing an aqueous solution of exceptional clarity and substantially complete lack of opaqueness when said hydrolysate is added to water.

(Emphasis added.)

Grain Processing has manufactured and sold a line of maltodextrins under the "Maltrin" brand name since 1969. The Maltrin line includes "Maltrin M100," a 10 D.E. maltodextrin. None of the Maltrin products, including M100, fall within claim 12 because they are all made from a non-waxy starch. See Grain Processing I, No. 81-0237, slip op. at 65 (construing claim 12 to require a waxy starch, as recited in the preamble).

American Maize began selling maltodextrins in 1974. It made and sold several types of maltodextrins, including "Lo-Dex 10," a 10 D.E. waxy starch maltodextrin. American Maize sold Lo-Dex 10 (called Fro-Dex 10 before 1982) during the entire time Grain Processing owned the '194 patent rights, from 1979 until the patent expired in 1991. During this time, however American Maize used four different processes for producing Lo-Dex 10. The changes in American Maize's production processes, and the slight chemical differences in the Lo-Dex 10 from each process, are central to the lost profits issue in this appeal.

American Maize used a first process (Process I) from June 1974 to July 1982. In Process I, American Maize used a single enzyme (an alpha amylase) to facilitate starch hydrolysis. American Maize controlled the reaction to produce a starch hydrolysate with the desired properties, including D.E. value.

Grain Processing sued American Maize for infringement on May 12, 1981, based on American Maize's Lo-Dex 10 sales as well as sales of two other maltodextrins - Lo-Dex 5 and ARD 2370. Grain Processing asserted all fourteen claims of the '194 patent, including product and process claims. The district court bifurcated the infringement and damages issues for trial.

In August 1982, while the suit was pending, American Maize reduced the amount of alpha amylase enzyme in its process to lower its production costs. To achieve the same end result with less enzyme, American Maize continued the reaction longer. American Maize used this process (Process II) exclusively to produce Lo-Dex 10 from August 1982 to February 1988. Grain Processing asserted in its lawsuit that Process II Lo-Dex 10 also infringed the '194 patent.

American Maize contended that Lo-Dex 10 (by both Processes I and II) did not infringe claim 12 of the '194 patent because it did not have a "descriptive ratio greater than about 2," as required by the claim.2 Descriptive ratio (D.R.) is a function of the D.E. measurement. According to the formula in claim 12, D.R. is inversely proportional to D.E. Because different scientific tests yield slightly different D.E. measurements, the resulting D.R. values derived therefrom also vary slightly.

When Grain Processing accused American Maize of infringement, Grain Processing used the "Schoorl test" for measuring the D.E. of Lo-Dex 10. American Maize, on the other hand, used the "Lane-Eynon test," which it believed was the "industry standard," to measure D.E. The Schoorl test tends to yield a lower D.E. and therefore a higher D.R. than Lane-Eynon. Under the Lane-Eynon test, American Maize's measurements revealed that Lo-Dex 10 did not infringe claim 12, because all of its Lo-Dex 10 samples had a D.R. of less than 1.9. Grain Processing's Schoorl tests on the same samples, however, yielded a D.R. of greater than 2.

Following a bench trial, the district court held that Lo-Dex 10 did not infringe any of the claims because it did not meet the "exceptional clarity" limitation. This court reversed, holding that Lo-Dex 10 met the "exceptional clarity" limitation and therefore infringed claim 12 and its dependent claims 13-14. Grain Processing II, 840 F.2d at 911. This court's decision, like the district court's, did not resolve the discrepancy between tests for measuring D.E. value. The district court subsequently entered an injunction on October 21, 1988, prohibiting American Maize from making or selling Lo-Dex 10 or any other waxy starch hydrolysate that infringed claims 12-14.

In response to the injunction, American Maize developed yet another process for producing Lo-Dex 10. In this new process (Process III), American Maize used more alpha amylase, adjusted the temperature and pH, and reduced the reaction time. American Maize used Process III exclusively to produce Lo-Dex 10 from March 1988 to April 1991.

American Maize believed Process III would yield a more uniform, noninfringing output of...

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