Ecolab Inc v. Envirochem Inc

• Decision Date: 06 September 2001
• Docket Number: No. 00-1402,00-1402
• Citation: 60 USPQ2d 1173,264 F.3d 1358
• Parties: (Fed. Cir. 2001) ECOLAB, INC., Plaintiff-Appellee, v. ENVIROCHEM, INC., Defendant-Appellant
• Court: U.S. Court of Appeals — Federal Circuit

Page 1358

264 F.3d 1358 (Fed. Cir. 2001)

ECOLAB, INC., Plaintiff-Appellee, v. ENVIROCHEM, INC., Defendant-Appellant.

No. 00-1402

United States Court of Appeals for the Federal Circuit

September 6, 2001

Appealed from: United States District Court for the District of New Jersey Judge Joseph A. Greenaway, Jr.

[Copyrighted Material Omitted]

Thomas L. Hamlin, Robins, Kaplan, Miller & Ciresi L.L.P, of Minneapolis, Minnesota, argued for plaintiff-appellant. With him on the brief were Randall Tietjen, and Emily M. Rome.

Charles A. Weiss, Kenyon & Kenyon, of New York, New York, argued for defendant-appellant. With him on the brief was Richard L. DeLucia.

Before NEWMAN, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and LINN, Circuit Judge.

LINN, Circuit Judge.

On cross-motions for summary judgment the United States District Court for the District of New Jersey determined that Envirochem, Inc.'s ("Envirochem") product line literally infringed claim 1 of Ecolab, Inc.'s ("Ecolab") United States Reissue Patent No. 32,818 (the "'818 patent"). Ecolab, Inc. v. Amerikem Labs., Inc., Nos. 96-437, 90-4712 (D.N.J. May 23, 2000) (infringement opinion) ("Ecolab I"). The district court also determined that neither equitable estoppel nor laches precluded Ecolab from obtaining an injunctive remedy against Envirochem for its literal infringement. Ecolab, Inc. v. Amerikem Labs., Inc., (D.N.J. Jan 8, 1999) (claim construction and equitable defenses opinion) ("Ecolab II"). Envirochem appeals both decisions. We conclude that the district court erred in construing the claim term "substantially uniform." In view of this error, we vacate the grant of summary judgment of literal infringement, and remand to the district court for further proceedings not inconsistent with this opinion. As for the district court's determination that neither estoppel nor laches precludes Ecolab from obtaining an injunction against Envirochem, we affirm.

BACKGROUND

The invention at issue is a solid detergent cast contained within a disposable container that surrounds the cast on all but one surface for use in commercial dishwashing machines. The main ingredients of the cast are alkali caustics, e.g., sodium hydroxide, and water conditioners-also called hardness sequestering agents, e.g., sodium tripolyphosphate. In particular, claim 1 recites:

1.A detergent-containing article of commerce comprising:

(a)a three-dimensional, solid, cast, hydrated, substantially uniform alkaline detergent for ware and hard surface washing comprising:

(1)at least about 30% by weight of an alkaline hydratable chemical consisting essentially of alkali metal hydroxide;

(2)an effective amount of a hardness-sequestering agent;

(3)water of hydration, at least a portion of said water of hydration being associated with said alkali metal hydroxide, wherein the alkali metal hydroxide and the hardness sequestering agent are present in an amount sufficient to render the cast detergent a solid at room temperature by virtue of the water of hydration; and

(b)a receptacle-shaped disposable container surrounding and in contact with said solid, cast, hydrated alkaline detergent composition on all but one surface thereof.

'818 patent, col. 27, ll. 38-60.

To form the cast, the ingredients are heated in a vat with water, poured into the container in a molten state and cooled. In use, the container is placed upside down in a dispenser in the dishwasher and water is intermittently sprayed against the exposed surface of the cast to dissolve it and allow it to flow into a tank of water to form the wash solution for a dishwashing cycle. A single cast can last through several hundred wash cycles.

Prior to the claimed invention, the commercial ware cleaning industry desired to increase sanitary standards and have shorter wash times. As a consequence, higher alkalinity detergents, e.g., detergents with greater concentrations of sodium hydroxide, began to be used. The higher alkalinity detergents, however, had stability problems because other components of the detergent such as chlorine-containing compounds and defoamers are not stable in the presence of highly alkaline chemicals. In addition, the increase in alkalinity made the detergents difficult to dissolve in a satisfactorily uniform manner because all the components of the detergent do not dissolve at the same rate. Furthermore, segregation of the chemicals during manufacturing, handling, and shipping was a problem because of the differing particle sizes and densities of the components of the detergent. The '818 patent was Ecolab's effort to solve the above problems.

The instant suit is not the first time Ecolab and Envirochem have been before the federal court in the District of New Jersey as adversaries. Indeed, prior to the instant suit, Ecolab sued Envirochem alleging that Envirochem's Jardian products infringed the '818 patent. The parties entered into a settlement agreement to resolve that infringement issue. The settlement agreement resulted in a consent judgment issuing from the district court on January 5, 1993. In that agreement, Envirochem conceded literal infringement and agreed to discontinue the manufacture and sale of solid cast detergent products that infringe the '818 patent by December 31, 1992. It also agreed not to manufacture or sell any such infringing products after that date.

After the litigation, Envirochem developed what it considered to be a new line of noninfringing products, eight in number. The new product line is a solid cast containing alkali caustics and water conditioners; but, according to Envirochem, the new product line is a substantially nonuniform cast of these materials, in which a substantially higher percentage of water conditioners is present in the last portion of the cast to be dissolved. This new cast was allegedly made pursuant to Envirochem's United States Patent No. 5,482,641. Before marketing its new product line, Envirochem claims to have sent Ecolab's counsel a letter on September 8, 1993 informing counsel of the new casts and its intent to begin distribution. Envirochem also claims to have forwarded Ecolab a sample of the new cast for testing. In the letter, Envirochem noted that "physical and chemical analysis [of the new cast] will reveal that . . . [it] is consistently non-uniform and contains substantially more than 25% sodium hydroxide." In view of the foregoing, Envirochem stated that "the new . . . [cast] cannot infringe the . . . ['818 patent, but] . . . if for some reason Ecolab disagrees, please advise . . . as soon as possible." Envirochem also indicated that they would begin shipping the new product line on September 17, 1993. Envirochem never received a response from Ecolab. However, Ecolab contends that they never received the letter and that its counsel returned the package unopened. Envirochem began distribution in September 1993.

In January of 1994, Ecolab began questioning Envirochem's distributors about the sale of the new Envirochem casts. On February 18, 1994, Envirochem, responding to what it perceived as harassment, sent Ecolab a letter pointing out that it had already sent Ecolab samples of the new product line. Ecolab did not respond to this letter and, in fact, did not begin to communicate directly with Envirochem until early in the summer of 1995. The letters exchanged at that time evidence that Envirochem again sent samples to Ecolab and that Ecolab was in the process of testing those samples.

The instant suit began, without warning, in December 1995 when Ecolab served Envirochem with a motion for an "immediate injunction" for violating the consent judgment in the earlier suit. The motion was denied and converted to a motion for a preliminary injunction. Ecolab, Inc v. Amerikem Labs., Inc., No. 90-4712 (D.N.J. May 31, 1996) (preliminary injunction) ("Ecolab III"). The district court (Barry, J.) found in particular that Ecolab had not shown that it was likely to carry its burden of proving that Envirochem's accused products were "substantially uniform" within the meaning of claim 1. Ecolab III, slip op. at 17. Ecolab asserted that "substantially uniform" means "containing effective amounts of phosphate and alkali sources throughout the cast so as to ensure the product's effectiveness." Id. at 11. In other words, according to Ecolab, if Envirochem's products work effectively at all times, they must be substantially uniform. Id.

The court expressly rejected Ecolab's construction noting that the phrase "'substantially uniform' clearly implies some degree of uniformity rather than simply a degree of effectiveness." Id. at 12. The court also rejected Envirochem's asserted definition of "homogeneity throughout the cast" because that definition reads out the term "substantially." Id. The court construed the phrase "substantially uniform" as describing "a cast in which the concentration of alkalinity and phosphates may vary from between 0.0% and 6.6%." Id. at 13-14. The percentages were derived from data presented to the Patent and Trademark Office during prosecution in the "Tinker Affidavit" comparing the chemical composition of the claimed "substantially uniform" product and several prior art solid cast compositions.

In view of that claim construction, Envirochem moved for summary judgment of noninfringement. The case was reassigned to Judge Greenaway, who denied Envirochem's motion in view of a wholly new claim construction. Ecolab II, slip op. at 17-19. Judge Greenaway reconstrued the term "substantially uniform" to mean "a level of continuity of the elements from top-to-bottom throughout the cast such that a homogeneous cleaning solution is formed over the life of the cast." Id. at 16. Judge Greenaway also granted an outstanding motion by Ecolab for partial summary judgment dismissing Envirochem's defenses of equitable estoppel and laches. Id. at 22. The court found that Envirochem could not establish material prejudice because Envirochem's belief that...