Dystar Textilfarben Gmbh & Co. v. C.H. Patrick

• Decision Date: 03 October 2006
• Docket Number: No. 06-1088.,06-1088.
• Citation: 464 F.3d 1356
• Parties: DYSTAR TEXTILFARBEN GMBH & CO DEUTSCHLAND KG, Plaintiff-Appellee, v. C.H. PATRICK CO., and Bann Quimica LTDA, Defendants-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

464 F.3d 1356

DYSTAR TEXTILFARBEN GMBH & CO DEUTSCHLAND KG, Plaintiff-Appellee, v. C.H. PATRICK CO., and Bann Quimica LTDA, Defendants-Appellants.

No. 06-1088.

United States Court of Appeals, Federal Circuit.

October 3, 2006.

William T. Enos, Oblon, Spivak, McClelland, Maier & Neustadt, P.C., of Alexandria, VA, argued for plaintiff-appellee. With him on the brief were Richard D. Kelly and Andrew K. Beverina.

Neil C. Jones, Nelson Mullins Riley & Scarborough, L.L.P., of Greenville, SC, argued for defendants-appellants.

Before MICHEL, Chief Judge, RADER and SCHALL, Circuit Judges.

MICHEL, Chief Judge.

DyStar Textilfarben GmbH & Co. Deutschland KG ("DyStar") sued defendants C.H. Patrick Co. and Bann Quimica Ltda. (collectively, "Bann") in the United States District Court for the District of South Carolina, alleging direct, contributory, and induced infringement of U.S. Patent No. 5,586,992 ("the '992 patent"),¹ which discloses a process for dyeing textile materials with catalytically hydrogenated leuco indigo. DyStar and Bann Quimica Ltda. are large chemical manufacturers that, inter alia, sell prereduced indigo for use in dyeing processes; C.H. Patrick Co. purchased prereduced indigo solution from Bann Quimica Ltda. in 2002 and used it to dye yarn in a process alleged to infringe.

The parties agreed to a jury trial before a magistrate judge. Prior to charging the jury and in open court, the magistrate judge granted DyStar's motion for judgment as a matter of law ("JMOL") that it had not engaged in inequitable conduct before the United States Patent and Trademark Office ("PTO"). The jury rendered a verdict that "Bann Quimica and/or C.H. Patrick" had infringed each of claims 1-4, assessed damages at $90,000, and declined to hold the '992 patent claims invalid for lack of enablement, anticipation or obviousness. DyStar Textilfarben GmbH & Co Deutschland KG v. C.H. Patrick Co., Civ. No. 6:02-2946-WMC (D.S.C. Sept. 16, 2005).

Following briefing, the magistrate judge denied Bann's motions for JMOL or, alternatively, a new trial on the question of invalidity of the '992 patent for anticipation, obviousness, and lack of enablement. DyStar Textilfarben GmbH & Co Deutschland KG v. C.H. Patrick Co., Civ. No. 6:02-2946-WMC (D.S.C. Nov. 1, 2005). The magistrate judge did not issue an opinion. His order stated:

The jury diligently considered the evidence presented and found for the plaintiff. This court concludes that the jury's verdict was reasonable and was supported by evidence in the record. Therefore, as this court has great respect for trial by jury and the right of the parties to request a jury trial, this court will not substitute its findings for those of the jury as the jury's decision was clearly supported by the trial record and was reasonable.

Id.

Bann appeals from the denials of its motions on anticipation and obviousness, and the grant of JMOL to DyStar regarding inequitable conduct. For the reasons explained below, we reverse the district court's denial of Bann's motion for JMOL of invalidity of claims 1-4 for obviousness.

I

Indigo has been used in dyeing textile materials for thousands of years. Because indigo pigment is insoluble in water, it must be de-oxidized, or "reduced," to a water-soluble white form known as "leuco indigo" before it can be used in dyeing. Leuco indigo is unstable; it oxidizes and returns to its blue pigment form when exposed to oxygen. Thus, leuco indigo solution needs to be kept in an oxygen-free environment, or otherwise stabilized, if it is not being used immediately for dyeing.

For many years, dyehouses commonly reduced indigo in-house through a process known as hydrosulfite reduction. Dyers created a "stock vat," in which indigo is reduced in water with sodium hydrosulfite and solubilized with an alkali, e.g., sodium hydroxide. The resulting leuco indigo solution is then transferred into a feed tank and fed into the dyebath. After the dyebath is prepared, the textile material is dyed through a process known as "dipping" and "skying." In "dipping," the textile material is contacted with leuco indigo in the dyebath; in "skying," the dyed textile material is introduced to the air, causing the indigo to convert back to its blue pigment form.

A second common method of indigo reduction, catalytic hydrogenation, was patented by Andre Brochet in 1917. See U.S. Patent No. 1,247,927 ("Brochet"). The superficial difference between hydrosulfite reduction and catalytic hydrogenation is that the latter uses gaseous hydrogen rather than sodium hydrosulfite, as a reducing agent. Catalytic hydrogenation allowed "economical production of concentrated solutions of leuco derivatives free from impurities and mineral salts"; when left to settle, the solution naturally separates from nickel or another catalytic metal and can be "drawn off and is ready for use". Brochet, ll.88-90, 109-110. Most important to the dyehouses, however, was the fact that Brochet's leuco indigo solution could be stabilized in solid form, usually powder or paste, and coated with molasses or glue to protect the reduced indigo from air and prevent premature oxidation. This allowed the indigo reduction process to shift out of the dyehouses and into chemical manufacturers, which began to produce and sell prereduced indigo to dyehouses in the early 1900s. Rather than create a stock vat, dyers needed only to dissolve the prereduced indigo into a preparation tank, add caustic soda (i.e., sodium hydroxide) and sodium hydrosulfite to remove oxygen from the water, and transfer the resulting solution from the preparation tank to the dyebath. This significantly reduced the time necessary to prepare a dyebath, the dyehouses' expenditures on sodium hydrosulfite and caustic soda, and the level of pollution in dyehouse waste water and on dyehouse floors.

The process of dyeing textile materials with catalytically hydrogenated leuco indigo traditionally has involved six steps: (1) reducing indigo to its leuco form in solution; (2) stabilizing the leuco indigo solution, usually in paste or powder form; (3) creating a preparation tank in which the dried leuco indigo is re-converted to solution form; (4) adding the solution to the dyebath; (5) dipping; and (6) skying.

Claim 1 of the '992 patent, the only independent claim at issue, recites:

A process for dyeing cellulose-containing textile material with indigo which comprises

a) introducing into a dyebath an aqueous solution of leuco indigo solution prepared by catalytic hydrogenation;

b) contacting the textile material with the dyebath; and, after the leuco indigo has gone onto the textile material,

c) converting said leuco indigo back into the pigment form in a conventional manner by air oxidation.

'992 patent, col.6, l.66-col.7, l.6. The '992 patent thus improved upon the prior art by eliminating steps two and three of the traditional process: stabilizing the leuco indigo solution into a paste or powder form, and then reconstituting the solution in a preparation tank. Instead, it allowed a dyer to pour prereduced indigo solution directly into a dyebath and commence dyeing immediately.

II

Bann appeals from the denials of its motions on anticipation of claim 1 and obviousness of claims 1-4, and the grant of DyStar's JMOL of no inequitable conduct. We review decisions on motions for JMOL and motions for a new trial under the law of the regional circuit. MicroStrategy, Inc. v. Bus. Objects, S.A., 429 F.3d 1344, 1348 (Fed.Cir.2005) (JMOL); EMI Group N. Am., Inc. v. Cypress Semiconductor Corp., 268 F.3d 1342, 1348 (Fed.Cir.2001) (new trial). In the Fourth Circuit, the grant or denial of JMOL is reviewed de novo, which requires us to step into the shoes of the trial judge and reapply the JMOL standard. Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 431 (4th Cir. 2004). "The question is whether a jury, viewing the evidence in the light most favorable to [DyStar], could have properly reached the conclusion reached by this jury. We must reverse if a reasonable jury could only rule in favor of [Bann]; if reasonable minds could differ, we must affirm." Id. (internal citation and quotation marks omitted). The denial of a motion for a new trial is reviewed in the Fourth Circuit for abuse of discretion. United States v. Perry, 335 F.3d 316, 320 (4th Cir.2003).

Bann asserts that claim 1 of the '992 patent is invalid because it is anticipated by Brochet. Bann further argues that claims 1-4 are invalid as obvious in light of Brochet and certain other prior art, including two pre-1917 BASF patents — United States Patent Nos. 820,900 ("Wimmer") and 885,978 ("Chaumat"), a post-World War II report of the British Intelligence Objectives Sub-Committee ("BIOS report"), and the 1936 Manual for the Dyeing of Cotton and Other Vegtable Fibres ("Manual"), published by General Dyestuff Corporation. We address the broader argument, relating to obviousness, first.

A

A determination that a claimed invention would have been obvious, and thus the patent issued thereon invalid, is a legal conclusion that we review de novo. Richardson-Vicks, Inc. v. Upjohn Co., 122 F.3d 1476, 1479 (Fed.Cir.1997). We must determine "if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103(a). We thus consider whether a person of ordinary skill in the art would have been motivated to combine the prior art to achieve the claimed invention and whether there would have been a reasonable expectation of success in doing so. Brown & Williamson Tobacco Corp. v. Philip Morris, Inc., 229 F.3d 1120, 1124 (Fed.Cir.2000).

Underpinning this legal inquiry are four groups of factual findings, which, in a jury trial, we review for substantial evidence. Richardson-Vicks, 122 F.3d at 1479. Following the 1952 ...