Cross v. Daewoo Elec.s Corp..

Decision Date29 October 2010
Docket NumberNos. 2009-1225, 2009-1244.,s. 2009-1225, 2009-1244.
Citation616 F.3d 1357
PartiesFUNAI ELECTRIC COMPANY, LTD., Plaintiff-Cross Appellant, v. DAEWOO ELECTRONICS CORPORATION and Daewoo Electronics America, Inc., Defendants-Appellants, and Daewoo Electronics Company, Ltd., Daewoo Electronics Corporation of America, Inc. and Daewoo Electric Motor Industries, Ltd., Defendants.
CourtU.S. Court of Appeals — Federal Circuit

616 F.3d 1357

FUNAI ELECTRIC COMPANY, LTD., Plaintiff-Cross Appellant,
v.
DAEWOO ELECTRONICS CORPORATION and Daewoo Electronics America, Inc., Defendants-Appellants,
and
Daewoo Electronics Company, Ltd., Daewoo Electronics Corporation of America, Inc. and Daewoo Electric Motor Industries, Ltd., Defendants.

Nos. 2009-1225, 2009-1244.

United States Court of Appeals,Federal Circuit.

Sept. 1, 2010.
Rehearing Denied Oct. 29, 2010.


616 F.3d 1358

COPYRIGHT MATERIAL OMITTED.

616 F.3d 1359

COPYRIGHT MATERIAL OMITTED.

616 F.3d 1360

COPYRIGHT MATERIAL OMITTED.

616 F.3d 1361

Michael J. Lyons, Morgan, Lewis & Bockius LLP, of Palo Alto, CA, argued for plaintiff-cross appellant. With him on the brief were Lorraine M. Casto and Harry F. Doscher.

Perry R. Clark, Law Offices of Perry R. Clark, of Palo Alto, CA, argued for defendants-appellants. With him on the brief were Jenny N. Lee and Sarah L. Forney, Kirkland & Ellis LLP, of Palo Alto, CA. Of counsel were Zhuanjia Gu and Avinash D. Lele.

Before NEWMAN, LOURIE, and LINN, Circuit Judges.

Opinion for court filed by Circuit Judge NEWMAN. Concurring Opinion filed by Circuit Judge LINN.

NEWMAN, Circuit Judge.

This appeal is taken from the final judgment of the United States District Court for the Northern District of California, on issues of patent infringement, validity, damages, and successor liability. 1 The district

616 F.3d 1362

court's judgment as to the patent issues is affirmed. We reverse as to successor liability, and remand for further proceedings on this issue.

Background

In May 2004 Funai Electric Company, Ltd. (“Funai”) filed suit against four Daewoo entities: Daewoo Electronics Corporation (“DEC”), a corporation of South Korea, and its predecessor Korean company Daewoo Electronics Company Ltd. (“DECL”); and their United States subsidiaries Daewoo Electronics America, Inc. (“DEAM”), a Florida Corporation, and its predecessor Daewoo Electronics Company of America (“DECA”), a California corporation. The charge was infringement of six United States patents owned by Funai pertaining to various electrical and mechanical components of video cassette players and recorders (“VCRs”). VCRs convert information stored on video cassette tapes into images displayed on a screen. The patented inventions are described as improvements that lower the cost of producing VCRs while maintaining product quality.

In early 2005 DECL and DECA ceased participating in the litigation, presenting no defense and refusing discovery. The district court entered default judgment against them and, based on the evidence before the court, awarded Funai $6,956,187 in damages for infringement by DECL and DECA before October 25, 2002, plus attorney fees and costs incurred as to these entities. The total award, including prejudgment interest, was $8,066,112. No appeal was taken from this award. However, DECL and DECA did not pay the judgment. Funai then asserted, by amended complaint, that the successor companies DEC (South Korea) and DEAM (Florida) are liable for payment. The district court reserved that issue until after trial on the merits.

The litigation proceeded as to DEC and DEAM (hereinafter together “Daewoo”). In various pre-trial proceedings the district court narrowed the issues for trial. Thus the court held, on summary judgment, that three of the six patents were not infringed. The remaining three patents were U.S. Patent No. 6,021,018 (“the '018 patent”); No. 6,421,210 (“the '210 patent”); and No. 6,064,538 (“the '538 patent”). After a Markman hearing, the court granted summary judgment that the '018 and '210 patents are not literally infringed, but denied summary judgment as to infringement under the doctrine of equivalents. The court denied summary judgment on the question of infringement of the '538 patent, either literally or under the doctrine of equivalents. The court also held, as a matter of law, that the claims of the '538 patent are not invalid on the ground of indefiniteness. The remaining issues were set for trial to a jury.

After a 14-day trial, the jury found that Daewoo willfully infringed the '018 and '210 patents under the doctrine of equivalents, and willfully infringed the '538 patent either literally or under the doctrine of equivalents for infringing acts occurring on and after October 25, 2002. The jury awarded Funai $7,216,698 in damages as against DEC, of which $2,298,590 was jointly assessed against DEC and DEAM. In view of the verdict of willful infringement, the court awarded Funai its attorney fees and expenses, but declined to enhance the damages awarded by the jury. The court entered a permanent injunction, and denied Daewoo's duly made post-trial motions.

616 F.3d 1363

The district court then considered Funai's request that the damages that had been awarded against the defaulting predecessor companies, DECL and DECA, be assessed against their successor companies DEC and DEAM. The court applied the law of South Korea as to successor liability, and ruled that neither DEC nor DEAM is liable for the judgment entered against their predecessors.

Daewoo appeals the aspects that were decided adversely to it, viz., the issues of infringement, claim indefiniteness, and damages. Funai cross-appeals the district court's refusal to enhance damages based on the jury's willfulness findings and the sanctioned attorney misconduct, and also appeals the ruling as to successor liability.

I
THE '018 PATENT

The '018 patent, issued February 21, 2000, is entitled “Loading Mechanism for a Video Cassette.” The claims are directed to an improvement in the movement of the cassette holder between an initial position and a play position, so that the door of the cassette is opened before the cassette holder is moved. This sequential motion allows the cassette to be closer to the door without colliding, thus beneficially reducing the overall size of the VCR. Claim 1 of the '018 patent is as follows:

1. A loading mechanism for loading a video cassette into a play position in a video cassette deck comprising:
a door having an opening for receiving said video cassette;
a cassette holder, for holding said video cassette at an initial position, and for moving said video cassette between said initial position and a play position while holding said video cassette;
a slide arm capable of sliding in parallel to an insertion direction of said video cassette;
a holder drive gear for driving said cassette holder via a gear mechanism so said cassette holder is positioned in the initial position when said slide arm is positioned at a first position, and is positioned in said play position when said slide arm is positioned at a second position; and
a door arm for driving said door in accordance with movement of said slide arm, so that when said slide arm slides from said second position toward said first position, said door arm opens said door while said slide arm slides from the first position towards a third position which is arranged between said first and second positions, and said holder drive gear starts to drive said cassette holder from said play position towards said initial position after said slide arm passes said third position so that said door is opened before said cassette holder is moved when said cassette holder is moved to said initial position.

(Emphasis added to the aspects at issue for infringement.)

The accused Daewoo products are VCR decks and combination TV/VCR and DVD/VCR decks, that include what is called a “T-Mecha” loading mechanism. Witnesses explained the structure and operation of the patented mechanism and the Daewoo products. The district court granted summary judgment that the “holder drive gear” limitation is not literally met by the Daewoo products, and the jury found that this limitation is met under the doctrine of equivalents. The other disputed limitation was based on the “opened” term, which was not presented to the jury because the district court granted summary judgment that this limitation is literally met. The jury found that claims 1-4 of the '018 patent were infringed. Each side appeals those rulings and findings adverse to it.

616 F.3d 1364

A. “Holder Drive Gear”

Funai appeals the summary judgment that claims 1-4 of the '018 patent are not literally infringed based on the court's “holder drive gear” interpretation, and Daewoo appeals the summary judgment that the “opened” limitation is literally met. The other limitations of these claims were conceded by Daewoo to be embodied in its accused cassette decks.

In the Daewoo products, when loading a cassette into a T-Mecha deck, the cassette is placed in the cassette holder in an “initial position” and thereafter is driven to a position, called an “intermediate” position, from which a pin on the cassette holder pushes the cassette downward about two millimeters, to the play position. The Daewoo ejection sequence is similar, but the actions occur in the reverse order. During ejection of a cassette the pin is released, allowing embedded springs to push the cassette upward from the play position about two millimeters, whereupon it arrives at the intermediate position as the door is opened. While in the intermediate position, and before further movement of the cassette holder to the initial position, the door becomes fully opened.

The district court ruled that the Daewoo cassette decks could not be found to literally meet the claim limitation that “said holder drive gear starts to drive said cassette holder from said play position towards said initial position,” for in the Daewoo decks “it is the slide arm cam's release of the pin that moves the holder from the play position.” Funai, 2006 WL 3780715, at *8. The court explained that in the Daewoo products the release of the pin holding down the video cassette, and the subsequent force of the springs applied to the cassette upon the release of the pin, move the cassette holder from the play position toward the initial position. Since this action is not performed by the...

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