Trebro Mfg., Inc. v. Firefly Equip., LLC

Decision Date09 April 2014
Docket NumberNo. 2013–1437.,2013–1437.
Citation748 F.3d 1159
PartiesTREBRO MANUFACTURING, INC., Plaintiff–Appellant, v. FIREFLY EQUIPMENT, LLC and Steven R. Aposhian, Defendants–Appellees.
CourtU.S. Court of Appeals — Federal Circuit

OPINION TEXT STARTS HERE

Antoinette M. Tease, Antoinette M. Tease, P.L.L.C. Intellectual Property and Technology Law, of Billings, MT, argued for plaintiff-appellant.

Timothy B. Smith, Parr Brown Gee & Loveless, P.C., of Salt Lake City, UT, argued for defendants-appellees. With him on the brief was Terry E. Welch.

Before RADER, Chief Judge, LOURIE, and PROST, Circuit Judges.

RADER, Chief Judge.

The United States District Court for the District of Montana denied plaintiff-appellant Trebro Manufacturing, Inc.'s (Trebro) motion for a preliminary injunction against defendants-appellees FireFly Equipment, LLC and Steven R. Aposhian (collectively, FireFly) for infringement of U.S. Patent No. 8,336,638 (the '638 patent). Trebro Mfg., Inc. v. FireFly Equip., LLC, No. 13–CV–0036, 2013 WL 1655993 (D.Mont. Apr. 17, 2013) (Order ). Because the district court abused its discretion in denying Trebro's motion, this court vacates the order and remands for further proceedings consistent with this opinion.

I.

Trebro acquired the '638 patent and U.S. Patent No. 7,721,814 (the '814 patent) on March 12, 2013, from 1045929 Ontario Ltd. (Ontario). See J.A. 297–305. Trebro also simultaneously granted Brouwer Turf Inc. (an affiliate of Ontario) a fully paid-up, royalty-free nonexclusive license to the patents. J.A. 302. Brouwer Turf had apparently been delinquent in royalty payments to Trebro under an unrelated license, which motivated the assignment. See J.A. 729.

On March 14, 2013, Trebro sued FireFly for infringement of the '638 and ' 814 patents, as well as for copyright infringement on certain software. J.A. 127–37. The next day, Trebro moved for a preliminary injunction on all infringement counts, but ultimately opted to pursue the motion only with respect to the '638 patent. J.A. 700.

The technology at issue involves “sod harvesters”—vehicles having knives that cut sod pieces from the ground, conveyor belts to transport the pieces, and mechanisms to stack them on a pallet. FireFly's accused product is a sod harvester called the ProSlab 150. Order at *1. Trebro also sells sod harvesters, including one called the SC2010 Slab. J.A. 763.

The '638 patent was filed June 28, 2012, issued December 25, 2012, and is titled “Method and Apparatus for Harvesting and Picking Up Sod.” The named inventors are Gerardus J. Brouwer and Robert Milwain. The patent claims priority based on a series of applications dating back to a provisional filed February 4, 2005. On the record before this court, FireFly does not contest priority on the '638 claims. Trebro also claims further priority of invention to November 2004 through an affidavit from named inventor, Mr. Brouwer, and a corroborating memorandum from his attorney at that time. J.A. 810–14.

Trebro asserted claims 1, 2, 4, 6, and 9. Claim 1 is pertinent for this appeal:

1. A sod harvester for harvesting a sod piece from a ground surface and stacking said sod piece on a support, the sod harvester comprising:

a) a sod cutting knife for cutting said sod piece from said ground surface;

b) at least one inclined conveyor movable at faster than ground speed;

c) a substantially horizontal conveyor, wherein said at least one inclined conveyor is adapted to carry said sod piece from said cutting knife to said substantially horizontal conveyor; and

d) a sod carrier movable between a first position above said horizontal conveyor and a second position, wherein, in said first position, said sod carrier is adapted to removably secure said sod piece to said sod carrier when said sod piece is on said horizontal conveyor, wherein said sod carrier is adapted to release said sod piece at said second position, wherein said horizontal conveyor is moveable in a vertical direction toward said sod carrier.

'638 patent col. 24 ll. 19–38 (emphasis added). Both the infringement and invalidity disputes on appeal focus on the last limitation of claim 1–a horizontal conveyor that moves vertically.

Figure 1 of the '638 patent generally illustrates an example of a sod harvester having features as in claim 1:

IMAGE

In Figure 1, the horizontal conveyor is mounted on a “bed frame” 140 that moves vertically via piston and cylinder 142. '638 patent col. 10 ll. 17–28. The parties agree that the '638 specification only explicitly describes one embodiment for the last limitation of claim 1 (a “horizontal conveyor [ ] moveable in a vertical direction”). Specifically, the specification describes raising and lowering a bed frame to which the conveyor is attached, as in Figure 1. See '638 patent col. 10 l. 18–col. 11 l. 45.

Claim 10, which depends from claims 1 and 9, explicitly covers a scenario where a bed frame is raised and lowered to effect the vertical lifting of the horizontal conveyor:

10. A sod carrier according to claim 9, further comprising a bed frame, said horizontal conveyor being mounted on said bed frame, wherein said bed frame is movable in a vertical direction toward and away from said sod carrier, thereby vertically moving said horizontal conveyor.

'638 patent col. 25 l. 5–col. 26 l. 3 (emphasis added).

While the preliminary injunction motion was pending, FireFly requested ex parte reexamination of the '638 patent. It based the request primarily on two patents invented by the same inventive entity (Brouwer and Milwain)U.S. Patent Nos. 7,407,362 ('362 patent), published January 6, 2005, and 6,779,610 ('610 patent), published April 1, 2004. J.A. 111–12. After ordering reexamination, the U.S. Patent and Trademark Office (PTO) terminated the proceeding because neither of the patents “qualify as prior art because [they are] not considered as being [invented] by ‘others' when considering 35 U.S.C. §[§ ]102(a) or (e).... and because [they were each published] within the 1 year grace period ... afforded under § 102(b).” ECF No. 38 at 8.

II.

The district court held a preliminary injunction hearing on April 11, 2013. Order at *1. At the hearing, Trebro's president, Steven Tvetene, testified, as did FireFly's owner, Steven Aposhian. Mr. Tvetene testified about several sod harvestersthat are, or were, on the market. In response to questioning about whether any such sod harvesters exhibited the feature of a horizontal conveyor that moves vertically, he testified that two such sod harvesters—the Kesmac Slabmatic 3000 and 1500—did. J.A. 747. He also testified that neither of these products entered the market until 2006 or later. Id.

Mr. Tvetene further testified that the sod harvester market is very small. He stated that the only competitors in this market are Trebro, FireFly, and Mr. Brouwer's company (a licensee to the '638 patent). J.A. 728–29. Mr. Tvetene testified that Trebro sells roughly eight sod harvesters per year at around $210,000 each. J.A. 731. He stated that a lost sale is approximately $50,000 in lost profit, which is roughly equal to the cost of one employee. Id. Although he admitted that none of Trebro's currently available sod harvesters practice the '638 patent, J.A. 729–30, Mr. Tvetene testified that Trebro's SC2010 Slab sod harvester directly competes for sales with FireFly's ProSlab 150, J.A. 763.

Mr. Tvetene testified that Trebro will lose market share if FireFly continues to sell its allegedly infringing product. J.A. 733. He asserted that every sale of the ProSlab 150 is a lost sale to Trebro. J.A. 731, 734. He further stated that the lost market share is [p]robably not” recoupable. J.A. 733. Mr. Tvetene also testified that Trebro will lose customers. For example, FireFly's first sale of its ProSlab 150 was to a Trebro customer. J.A. 731–32. He also testified that “once a farmer buys a sod harvester,” the farmer will not need “to replace it for many years in the future.” J.A. 733. Finally, Mr. Tvetene testified that Trebro “will have to lay people off” in the absence of an injunction. J.A. 734, 736–38. Trebro is a small company with eighteen employees. J.A. 734.

FireFly's owner, Mr. Aposhian, testified that the ProSlab 150 does not infringe claim 1 of the '638 patent. Specifically, he stated that it does not meet the last limitation requiring vertical movement of the horizontal conveyor. Instead, according to Mr. Aposhian, the horizontal conveyor belt merely “changes shape.” J.A. 777–79. He did testify, though, that with this shape change, [t]here's an element of up” with respect to lifting a sod piece for the sod carrier to receive it. J.A. 791.

Mr. Aposhian testified that FireFly entered the sod harvester sales market to meet the need for an improved sod harvester other than those currently available. See J.A. 769–70. Mr. Aposhian testified that, in addition to the shape change of the horizontal conveyor belt, the ProSlab 150 has other beneficial features. These include its weight balance (because it is lighter), its “electric stacker” (which stacks sod pieces higher), and its “pickup mechanism” (which picks up sod pieces faster). J.A. 770–76.

Mr. Aposhian testified that he formed FireFly in January 2010. J.A. 769. Until FireFly made the ProSlab 150 commercially available, its primary business was selling replacement parts, approximately 80 percent of which was for Trebro machines. J.A. 794–95; see also J.A. 769–70. In addition to the one ProSlab 150 already sold at the time of the injunction hearing, Mr. Aposhian testified that FireFly had “pre-sold” six more. J.A. 793–94. Finally, he testified that an injunction against FireFly would put it out of business. J.A. 789.

The district court denied Trebro's preliminary injunction motion the day before a “major trade show for the sod harvester industry.” Order at *1. The court found no substantial likelihood of success on the merits for failing to meet the “horizontal conveyor [ ] moveable in a vertical direction” limitation. Id. at *3. The court stated that ...

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