Transclean Corp. v. Bridgewood Services, Inc.

• Citation: 290 F.3d 1364
• Decision Date: 21 May 2002
• Docket Number: No. 01-1269.,No. 01-1268.,01-1268.,01-1269.
• Parties: TRANSCLEAN CORPORATION, James P. Viken, Jon A. Lang, and Donald E. Johnson, Plaintiffs-Appellants, v. BRIDGEWOOD SERVICES, INC., Defendant/Cross-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

290 F.3d 1364 TRANSCLEAN CORPORATION, James P. Viken, Jon A. Lang, and Donald E. Johnson, Plaintiffs-Appellants,
v.
BRIDGEWOOD SERVICES, INC., Defendant/Cross-Appellant. No. 01-1268. No. 01-1269. United States Court of Appeals, Federal Circuit. Decided: May 21, 2002. Rehearing Denied: July 2, 2002.

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Alan M. Anderson, Fulbright & Jaworski L.L.P., of Minneapolis, MN, argued for plaintiffs-appellants. With him on the brief was Christopher K. Larus.

Warren E. Olsen, Fitzpatrick, Cella, Harper & Scinto, of Washington, DC, argued for defendant-cross appellant. With him on the brief were Brian L. Klock and Stephen E. Belisle.

Before NEWMAN, LOURIE, and CLEVENGER, Circuit Judges.

LOURIE, Circuit Judge.

Transclean Corporation, James P. Viken, Jon A. Lang, and Donald E. Johnson (collectively "Transclean") appeal from a judgment of the United States District Court for the District of Minnesota (1) reversing entry of a portion of a jury's damages award for infringement of Transclean's U.S. Patent 5,318,080, Transclean Corp. v. Bridgewood Serv., Inc., No. 97-2298, slip op. at 28 (D.Minn. Jan. 8, 2001) ("Damages Opinion"); (2) denying its motion for enhanced damages under 35 U.S.C. § 284, id. at 66, as well as attorney fees under 35 U.S.C. § 285 and Minn.Stat. § 8.31, Transclean Corp. v. Bridgewood Serv., Inc., 134 F.Supp.2d 1049, 1061 (D.Minn.2001) ("Attorney Fees Opinion"); and (3) granting summary judgment of noninfringement on its claim of trademark infringement, Transclean Corp. v. Bridgewood Serv., Inc., 77 F.Supp.2d 1045, 1094-95 (D.Minn.1999) ("Summary Judgment Opinion"). Bridgewood cross-appeals from the court's grant of summary judgment that the '080 patent is not invalid for anticipation and that Bridgewood infringed claims 1-4 and 12. Id. at 1063, 1081, 1083. Bridgewood also cross-appeals from the court's denial of its motion for summary judgment of noninfringement of claim 13. Id. at 1087. For the reasons set forth below, we affirm-in-part and vacate-in-part.

BACKGROUND

Transclean is the assignee of the '080 patent, which is directed to an automatic transmission fluid changing apparatus. The fluid circulates from an automobile's automatic transmission case to a radiator and back via circulation lines. '080 patent at col. 1, ll. 6-12. The invention of the patent is designed to tap into a fluid circulation line and become part of the circulation system for the duration of the fluid changing procedure. Id. at col. 3, ll. 8-19. In that configuration, the invention collects used fluid as it circulates around and into the machine, while supplying new fluid into the circulation system. Id. Prior to the invention, such machines were not capable of matching the supply rate of new fluid to the outflow rate of used fluid. Id. at col. 2, ll. 56-68. As a result, one of two problems was likely to occur. First, if the supply rate was less than the outflow rate, the transmission could become starved of fluid, which could lead to excessive heating and

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damage to the transmission. Id. Second, if the supply rate exceeded the outflow rate, a buildup of internal fluid pressure could stress and damage seals in the transmission. Id. The invention aimed to solve these problems by balancing the supply rate to the outflow rate. Id. at col. 3, ll. 8-19. Claim 1, the only independent claim, reads as follows:

1. In a fluid replacing apparatus for an automatic transmission an improvement having fluid circulation inlet and outlet ports comprising:

a fluid receiver adapted to be connected to the fluid circulation output port on said automatic transmission;

a source of fresh transmission fluid adapted to be connected to the fluid circulation inlet port on said automatic transmission so that fluid circulates therethrough; and

means connected to said fluid receiver and said source of fresh fluid, for equalizing the fluid flow into said fluid receiver and out of said source of fluid.

Id. at col. 8, ll. 10-23 (emphases added).

As can be seen, the claims recite a "means ... for equalizing the fluid flow" in the manner authorized by 35 U.S.C. § 112, ¶ 6. The specification discloses several structures corresponding to the claimed "means." According to one structure, the fluid receiver and source of fresh transmission fluid are segregated portions of the same tank, and the means for equalizing is a flexible diaphragm that defines the boundary dividing the tank into two segregated portions. Id. at figure 3. A structure with those characteristics is the subject of claim 13, which reads as follows:

13. The apparatus of claim 1 in which the means for equalizing the flow is comprised of means disposed intermediate the fluid receiver and source, said means exhibiting resilient characteristics for exerting a force, related to the pressure existing in the fluid circulation circuit of said transmission and said receiver, upon the fluid in said source.

Id. at col. 8, ll. 55-61 (emphasis added). Another structure corresponding to the means for equalizing in claim 1 is a pair of tanks, one for used fluid and one for fresh fluid charged by pressurized air. Id. at figs. 4,6.

Bridgewood is a competing distributor of transmission service equipment to automobile service businesses. Bridgewood's accused device is the embodiment described in its own U.S. Patent 5,522,474. Briefly, Bridgewood's device consists of a reservoir divided into two chambers by a free floating piston. '474 patent, abstract. The reservoir above the piston is initially filled with fresh fluid, and the reservoir below the piston is initially empty and compressed. Id. Extending from each chamber is a line for connection to an automobile's automatic transmission fluid circulation system at a point where a technician breaks the fluid circuit. Id. Thereafter, operation of the transmission pump sends used fluid into the bottom chamber, thereby forcing the piston to expel fresh fluid from the top chamber into the transmission's fluid circulation system. Id. When the technician can see fresh fluid being pumped into the bottom chamber, the procedure is halted, as the fluid has been essentially completely replaced, id., even though not all of the used fluid could possibly be expelled, Attorney Fees Opinion at 1056.

Bridgewood is no longer in business, having sold all of its assets, including goodwill, to Century Manufacturing Company for a total of $7,744,000, which was $6,522,000 above and beyond the book value of Bridgewood's tangible net worth. Century subsequently took a license under the '080 patent from Transclean, agreeing to a royalty rate of nine percent.

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Transclean sued Bridgewood for infringement of the '080 patent and its TOTAL FLUID EXCHANGE and TOTAL FLUID X CHANGE trademarks, as well as false advertising by Bridgewood's promotional claims that its device replaced "100%" or "every drop" of fluid. Before trial, both parties filed motions for partial summary judgment, Transclean seeking summary judgment on the issues of patent infringement and validity, and Bridgewood seeking summary judgment of noninfringement of claim 13 as well as Transclean's trademarks. The court granted all of those motions except that relating to claim 13. More specifically, the court granted summary judgment that the '080 patent was not anticipated by either U.S. Patent 3,513,941, issued to N.J. Becnel, or Japanese Patent 2-72299. Summary Judgment Opinion at 1081. Furthermore, the court granted Transclean's motion for summary judgment that Bridgewood infringed claims 1-4 and 12 of the '080 patent, after precluding Bridgewood from arguing noninfringement of those claims as a sanction for Bridgewood's failure to answer an interrogatory seeking its bases for arguing noninfringement. Id. at 1062-63. Finally, the court granted Bridgewood's motion that Bridgewood had not infringed Transclean's trademarks. Id. at 1094-95.

The case was then tried to a jury, which found that Bridgewood willfully infringed claim 13 and engaged in false advertising. The jury awarded Transclean three types of damages for the patent infringement. Damages Opinion at 3. The first was a reasonable royalty based on Bridgewood's sales of infringing devices; the second was additional damages for the infringement; and the third was a reasonable royalty based on Bridgewood's sale of its business. Id.

In a post-trial motion, Bridgewood sought to overturn the jury's damages awards. The court partly agreed and held that as a matter of law Transclean was not entitled to more than $1,874,500 for patent infringement. Id. at 65-66. Transclean also filed a post-trial motion seeking enhanced damages and attorney fees pursuant to 35 U.S.C. §§ 284 and 285 in light of the jury's finding of willful infringement, but the court denied both requests. Id. at 66. Additionally, Transclean filed a post-trial motion pursuant to Minnesota's private attorney general statute, Minn.Stat. § 8.31, seeking attorney fees it incurred in pursuing the false advertising claim, but the court denied that request as well. Id.

Transclean appeals and Bridgewood cross-appeals from the decisions of the district court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

We review a district court's grant of summary judgment de novo, reapplying the same standard used by the district court. Ethicon Endo-Surgery, Inc. v. U.S. Surgical Corp., 149 F.3d 1309, 1315, 47 USPQ2d 1272, 1275 (Fed.Cir.1998). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477...