Group One, Ltd. v. Hallmark Cards, Inc.

• Decision Date: 13 June 2005
• Docket Number: No. 04-1296.,No. 04-1297.,04-1296.,04-1297.
• Parties: GROUP ONE LTD., Plaintiff-Appellant, v. HALLMARK CARDS, INC., Defendant-Cross Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

407 F.3d 1297

GROUP ONE LTD., Plaintiff-Appellant, v. HALLMARK CARDS, INC., Defendant-Cross Appellant.

No. 04-1296.

No. 04-1297.

United States Court of Appeals, Federal Circuit.

DECIDED: May 16, 2005.

Rehearing Denied June 13, 2005.

COPYRIGHT MATERIAL OMITTED

Robert Neuner, Baker Botts L.L.P., of New York, New York, argued for plaintiff-appellant. With him on the brief were Neil P. Sirota and Karen Wuertz. Of counsel on the brief was Patrick Lysaught, Baker Sterchi Cowden & Rice, LLC, of Kansas City, Missouri.

Michael E. Florey, Fish & Richardson P.C., P.A., of Minneapolis, Minnesota, argued for defendant-cross appellant. With him on the brief were John A. Dragseth and Deanna J. Reichel. Of counsel was Courtney M. Nelson Wills. Of counsel on the brief were Norman C. Kleinberg, Jeff H. Galloway, and Peter A. Sullivan, Hughes Hubbard & Reed LLP, of New York, New York.

Before LOURIE, Circuit Judge, PLAGER, Senior Circuit Judge, and DYK, Circuit Judge.

DYK, Circuit Judge.

Group One Ltd. ("Group One") appeals from the judgment of the District Court for the Western District of Missouri finding, inter alia, its U.S. Patent Nos. 5,518,492 (the "'492 patent") and 5,711,752 (the "'752 patent") invalid. Group One, Ltd. v. Hallmark Cards, Inc., No. 97-CV-1224 (W.D.Mo. Feb. 20, 2004). Hallmark Cards, Inc. ("Hallmark") cross appeals on various issues. We reverse the district court's grant of judgment as a matter of law ("JMOL") for obviousness, and reinstate the jury verdict that the patents were not invalid for obviousness. However, we affirm the district court's decision that it could not correct the '492 patent and that the claims of the '492 patent were invalid. We also affirm the district court's decisions that (1) the '752 patent was retroactively reinstated by the payment of overdue maintenance fees; (2) summary judgment of noninfringement regarding Modified Machine No. 7 was appropriate; and (3) an injunction should issue enjoining the use of an air blower. We further hold that the terminal disclaimer of the '752 patent was effective. We affirm-in-part and reverse-in-part the judgment as to prejudgment interest. We remand for the district court to consider Hallmark's motion for JMOL on infringement and the award of enhanced damages, attorney fees, and costs.

BACKGROUND

I

This is the third time this case has come before this court. In Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041 (Fed. Cir.2001), we reversed the district court's judgment that the '492 and '752 patents were invalid due to an on-sale bar, and affirmed its judgment rejecting Group One's trade secret claim. In In re Group One Ltd., 76 Fed.Appx. 287 (Fed.Cir.2003), we denied Group One's motions for expedited appeal and stay, and petition for writ of mandamus regarding various interlocutory orders of the district court.

II

Group One is the assignee of the '492 and '752 patents, which claim a device and method of curling ribbon, respectively. [J.A. at 156, 172, 180]. Frederic Goldstein ("Goldstein"), Group One's managing director and sole beneficial shareholder, is the named inventor on both patents. Hallmark manufactures pre-curled ribbon products using a number of ribbon curling machines.

The '492 patent issued on May 21, 1996. Claim 1 of the patent is representative of the claims at issue and reads:

A ribbon curling device comprising:

delivery means (12) for delivering a supply of unstressed curlable ribbon;

curling means (17) located downstream of said delivery means (12) for curling the ribbon;

mechanical drive wheel means (31, 32, 33) located downstream of said curling means (17) for drawing the ribbon across said curling means (17); and

stripping means (36) for separating the ribbon from said mechanical drive wheel means.¹

'492 patent, col. 6, ll. 45-55.

The '752 patent issued on January 27, 1998, and its sole claim reads as follows:

A method for curling ribbon utilizing a device having a delivery means for delivering a ribbon supply, a curling means located downstream of said delivery means for curling the ribbon, a mechanical drawing means for mechanically drawing a ribbon across the curling means and a stripping means for separating the ribbon from said mechanical drawing means comprising the steps of:

delivering a supply of unstressed curlable ribbon from said delivery means;

mechanically drawing said ribbon, by utilizing said mechanical drawing means, across said curling means, said curling means being located downstream of said delivery means, and said mechanical drawing means being located downstream of said curling means;

curling said ribbon with said curling means; and

separating the curled ribbon utilizing said stripping means from said mechanical drawing means in order to prevent the curled ribbon from adversely affecting operation of said mechanical drawing means by preventing the ribbon from adhering to the mechanical drawing means.

'752 patent, cols. 7-8. Thus both patents disclose four elements: (1) delivery means, (2) curling means, (3) mechanical drawing means, and (4) stripping means.

III

On September 4, 1997, Group One filed suit against Hallmark alleging, inter alia, infringement of claims 1, 2, 5, 6, 11, 17, and 19 of the '492 patent and claim 1 of the '752 patent. On June 20, 2003, the district court granted summary judgment of noninfringement in favor of Hallmark regarding Modified Machine No. 7.² Group One obtained a jury verdict in its favor and against Hallmark on September 15, 2003, with respect to the other accused devices. The jury found that Hallmark had not proven any of the asserted claims obvious by clear and convincing evidence, and that Group One had proven infringement of all of the asserted claims by a preponderance of the evidence. The jury awarded Group One $8,900,000 in damages and found Hallmark's infringement willful.

Following the jury verdict, the district court considered various motions filed by both parties. In its order of October 22, 2003, the district court (1) found the claims of the '492 patent invalid for indefiniteness and that it could not correct a printing error that resulted in essential language's being left out of claim 1;³ (2) limited infringement damages to the '752 patent, thus reducing the jury's total damages award; (3) found the expiration of the '752 patent during the litigation for failure to pay maintenance fees and its subsequent revival irrelevant to the issue of damages; (4) denied Group One prejudgment interest; and (5) enjoined Hallmark from using a blower or transvector on its machines used to make curled ribbon products. Several months later, the district court granted Hallmark's motion for JMOL on the ground that the claims of both the '492 and '752 patents were obvious, even if the printing error in claim 1 of the '492 patent were corrected by the district court. Judgment was entered in favor of Hallmark.

We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

I

We affirm the district court's judgment regarding the invalidity of the claims of the uncorrected '492 patent on grounds of indefiniteness because necessary language was omitted from the claims. Group One does not challenge this holding except to argue that the district court should have corrected the claims to add the necessary language. Group One's strongest argument relates to claim 1.⁴ Due to amendments made during prosecution of the patent, the stripping means element of claim 1 of the '492 patent should have read:

stripping means (36) for separating the ribbon from said mechanical drive wheel means in order to prevent said ribbon from adversely affecting operation of said mechanical drive wheel means by adhering to said mechanical drive wheel means.

Group One, Ltd. v. Hallmark Cards, Inc., No. 97-CV-1224, slip op. at 3 (W.D.Mo. Oct. 22, 2003) (emphasis added). A printing error by the PTO resulted in the omission of the emphasized language from the claims. Id. The district court held that it lacked authority to correct the error, and that only the PTO could correct the printing error acting under 35 U.S.C. § 254. Id. Group One argues that the district court was wrong and that Hallmark's argument supporting the district court is "sanctionable." In fact, it is Group One's argument that lacks any foundation.

The alleged error involved here was correctable by the PTO. Section 254 provides for the correction of a PTO mistake with consequences set out in the statute as follows: "Every such [corrected] patent, together with such certificate, shall have the same effect and operation in law on the trial of actions for causes thereafter arising as if the same had been originally issued in such corrected form." 35 U.S.C. § 254 (2000) (emphasis added). While the error was that of the PTO, so far as the record reveals, Group One has failed to seek correction from the PTO.

Even though the PTO has the authority to correct its own errors under § 254, we have held that in some circumstances the district court can correct errors retroactively. But the district court can correct an error only if the error is evident from the face of the patent. Novo Indus., L.P. v. Micro Molds Corp., 350 F.3d 1348, 1357 (Fed.Cir.2003). "A district court can correct a patent only if (1) the correction is not subject to reasonable debate based on consideration of the claim language and the specification and (2) the prosecution history does not suggest a different interpretation of the claims." Id. (emphasis added). Because a reader of the patent at issue in Novo Industries could not ascertain the error from the face of the patent, we held that it was beyond the district court's authority to guess at what was intended, and that the error, if any, could only be corrected by the PTO. Id. at 1357-58. We recently followed Novo Industries in Hoffer, holding that an error apparent from the face of the patent could have been corrected by the district court. Hoffer v. Microsoft...