Ruiz v. A.B. Chance Company
| Decision Date | 06 December 2000 |
| Citation | 57 USPQ2d 1161,234 F.3d 654 |
| Parties | (Fed. Cir. 2000) RICHARD RUIZ and FOUNDATION ANCHORING SYSTEMS, INC., Plaintiffs-Cross Appellants, v. A.B. CHANCE COMPANY, Defendant-Appellant. 99-1557, -1563 DECIDED: |
| Court | U.S. Court of Appeals — Federal Circuit |
Appealed from: United States District Court for the Eastern District of Missouri Judge Catherine D. Perry
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[Copyrighted Material Omitted] W. Michael Gardner, Dady & Garner, P.A., of Minneapolis, Minnesota; andMatthew A. Rosenberg, Herzog, Crebs & McGhee, LLP, of St. Louis, Missouri, argued for plaintiffs-cross appellants. With them on the brief was Mark R. Dunn, Herzog, Crebs & McGhee, LLP. Of counsel was Cheryl A. Stanton, Dady and Garner.
John H. Quinn, III, Armstrong Teasdale LLP, of St. Louis, Missouri, argued for defendant-appellant. With him on the brief was Andrew B. Mayfield. Of counsel was Lisa M. Wood.
Before NEWMAN, MICHEL, and RADER, Circuit Judges.
The A.B. Chance Company ("Chance") appeals the decision of the United States District Court for the Eastern District of Missouri finding claims 1 through 4 and claims 6 through 8 of U.S. Patent Nos. 5,139,368 ("the '368 patent") and 5,171,107 ("the '107 patent") invalid for obviousness under 35 U.S.C. § 103 (1999). On cross-appeal, Richard Ruiz and Foundation Anchoring Systems, Inc. (a/k/a "Fasteel") argue that the district court erred in the following rulings: 1) finding infringement of claims 1 through 4 and claims 6 through 8 of the '368 and '107 patents; 2) denying recovery of attorney fees under 35 U.S.C. § 285 (1994) due to Chance's alleged inequitable conduct; 3) concluding that neither party was prevailing for the purpose of awarding costs under Fed. R. Civ. P. 54(d); and 4) granting summary judgment against Ruiz and Fasteel on their claims of discrimination pursuant to 42 U.S.C. § 1981, breach of contract, breach of the implied duty of good faith and fair dealing, equitable and promissory estoppel, and tortious interference with contract and prospective business relations.
Because the district court failed to make factual findings on obviousness as set forth by the Supreme Court in Graham v. John Deere Co., 383 U.S. 1, 17-18, 148 USPQ 459, 467 (1966), we must vacate the judgment of invalidity and remand to the district court. On remand, we instruct the district court to make specific Graham findings on: 1) the reason, suggestion, or motivation present in the prior art, in the knowledge of those of ordinary skill in the art, or in the problem of foundation settling which clearly and particularly would lead one of ordinary skill in the art to combine screw anchors and metal brackets; 2) the level of ordinary skill in the art; and 3) whether, and to what effect, evidence of secondary considerations, such as commercial success, long-felt but unresolved need, failure of others, copying, and unexpected results, is probative in the obviousness analysis.
We affirm the district court's finding of infringement, and its refusal to award attorney fees and costs. We also affirm the district court's grant of summary judgment on the non-patent claims.
Since the 1970s, Chance has manufactured and sold screw anchors, also known as helical anchors, for stabilizing and supporting electrical transmission over tower legs. A screw anchor consists of "an elongated shaft presenting an earth-penetrating tip and a transversely extending load-bearing member." '368 patent, col. 2, ll. 32-35. In late 1988, Chance began using screw anchors with metal brackets to stabilize residential and commercial structures. The craft of stabilizing a sinking structure is known as "underpinning." In March 1989, Chance engineers demonstrated a prototype of its invention to Richard Fuller and Stan Rupiper, who used a method of underpinning employing screw anchors with concrete haunches. As the district court noted, "[a]t that time, neither Fuller nor Rupiper made any indication that they felt they had already designed a bracket or had already been using a bracket or a support of the same type."
In 1992, the Patent and Trademark Office ("PTO") issued Chance the 368 patent, col. 1, ll. 13-20. In the method claimed in the '368 patent, the metal bracket connects the screw anchor to the foundation and transfers the dead weight and live load of the foundation to each screw anchor. See id., col. 2, ll. 20-26. Users of the method place the screw anchor adjacent to the footing, and then rotate and screw the anchor "below the footing until the upper end of the shaft is adjacent the footing and a predetermined resistance to rotation of the anchor has been achieved." Id., col. 2, ll. 31-39. "Upon release of rotational torque on the anchor shaft so that the anchor may return to its unstressed state, the anchor shaft and foundation and/or footing are connected via a [metal] bracket assembly to establish the desired load-bearing relationship." Id., col. 2, ll. 45-50.
U.S. Patent Nos. 4,911,580 ("the '580 patent") and 4,765,777 ("the '777 patent"), issued to Gregory, disclose an apparatus and method for raising and supporting a structure using push piers and metal brackets. In the Gregory method, the user attaches a metal bracket to the foundation and drives the push piers through the bracket and into the ground until encountering resistance from soil friction or impinging upon bedrock. '580 patent, col. 4, ll. 21-26. Continued force lifts the foundation, and transfers the weight of the structure to the pier. Further movement of the foundation may take place following transfer of the load, particularly if the pier is held in place by soil or friction.
The Fuller and Rupiper method uses screw anchors with concrete haunches as an underpinning solution. In this method, popular in settings having high seismic activity such as California, the user excavates the earth around and beneath the foundation to install a screw anchor and to place steel reinforcing rods in the excavation. The contractor then pours concrete into the excavation and allows the concrete to dry before backfilling the excavation. In the concrete haunch method, the weight of the structure is not transferred to the screw anchor until there is further downward settlement of the foundation onto the hardened concrete. This method must also be performed in a specific sequence, as the screw anchor must be installed before the concrete hardens, and the resulting connection is formed.
In April 1989, Ruiz incorporated Fasteel to provide building stabilization services using Chance's products and methods. Ruiz is Hispanic, and is the sole owner of Fasteel. In June 1989, Chance and Ruiz entered into a "Distributorship Agreement," whereby Chance appointed Fasteel to act as an authorized, non-exclusive distributor. The Agreement contained a "best efforts" clause. For the next few years, Ruiz and Fasteel sold Chance products exclusively and only used the Chance underpinning method. Ruiz and Fasteel also recruited dealers for the Chance method, created marketing materials, developed products, and conducted training programs. Ruiz extolled the advantages of the Chance methods over the prior art to other contractors.
In the 1990s, Ruiz expanded his business by forming other companies. In 1993, Ruiz incorporated Foundation Technology, Inc. ("FTI"), originally the Kansas City, Missouri, office of Fasteel. Ruiz was the sole owner of FTI. At first, FTI only sold Chance products, but by 1997, it was also the distributor for foundation repair parts not manufactured by Chance. In 1995, Ruiz and Steven Gregory established R.J. Enterprises, L.L.C., to sell Ram Jack products, which were competitive with Chance's products. The Ram Jack products utilized the Gregory patented push pier method. Ruiz had a 51 percent interest in R.J. Enterprises. Ruiz also set up Advanced Building Technology, Inc. ("ABT"), wholly-owned by Ruiz, to sell Ram Jack products. According to Ruiz, FTI or ABT would distribute Ram Jack products in locations where Ruiz was already a Chance distributor. R.J. Enterprises would service those areas where Ruiz did not distribute Chance products.
In 1996, Chance became aware that Ruiz, through one of his companies, had offered Ram Jack products to a dealer in Chance territory for which Ruiz was responsible. Chance requested that Ruiz stop the activity. Ruiz wrote Chance a letter arguing that Chance had allowed other distributors to sell competitive products, and that he believed Chance's actions to be motivated by a discriminatory purpose.
On February 18, 1997, Gary Bartee, a Chance manager, and Mike Estes, Chance's controller, signed a "Distributor Termination Request" form. The form stated that Chance was terminating Fasteel because "Fasteel, Inc., is establishing itself to promote and sell competitive underpinning system[s] through the existing Chance system dealers." The next day, Jeff Witten, the Senior Vice-President of Chance's parent company, terminated Fasteel's distributorship pursuant to a provision in the Distributorship Agreement,...
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