Nordock, Inc. v. Sys. Inc.

• Decision Date: 29 September 2015
• Docket Number: 2014–1795.,Nos. 2014–1762,s. 2014–1762
• Parties: NORDOCK, INC., Plaintiff–Appellant v. SYSTEMS INC., dba Poweramp, dba DLM Inc., dba McGuire, Defendant–Cross–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

803 F.3d 1344

116 U.S.P.Q.2d 1650

NORDOCK, INC., Plaintiff–Appellant

v.SYSTEMS INC., dba Poweramp, dba DLM Inc., dba McGuire, Defendant–Cross–Appellant.

Nos. 2014–1762

2014–1795.

United States Court of Appeals, Federal Circuit.

Sept. 29, 2015.

Jeffrey Scott Sokol, Sokol Law Office, Milwaukee, WI, argued for plaintiff-appellant.

Philip P. Mann, Mann Law Group, Seattle, WA, argued for defendant-cross-appellant. Also represented by Timothy John Billick, I; John Whitaker, Whitaker Law Group, Seattle, WA.

Before O'MALLEY, REYNA, and CHEN, Circuit Judges.

Opinion

O'MALLEY, Circuit Judge.

Nordock, Inc. (“Nordock”) filed suit against Systems, Inc. (“Systems”) in the United States District Court for the Eastern District of Wisconsin alleging infringement of U.S. Design Patent No. D579,754 (“the D'754 Patent”), which claims the ornamental design of a lip and hinge plate for a dock leveler. A jury found that Systems' hydraulic dock levelers infringe the D'754 Patent, and that the patent is not invalid. The district court entered judgment awarding Nordock $46,825 in damages as a reasonable royalty.

Both parties filed post-trial motions to amend the judgment pursuant to Rule 59 of the Federal Rules of Civil Procedure. Specifically, Nordock filed a motion to amend the judgment regarding damages, or in the alternative, for a new trial. Systems also sought to amend the judgment, arguing that there was insufficient evidence to support the jury's finding of infringement with respect to Systems' 6 ½ foot dock levelers. The district court denied both motions. Nordock, Inc. v. Sys., Inc., No. 11–C–118, 2014 WL 3786277 (E.D.Wis. July 31, 2014) (“Rule 59 Decision ”).

Nordock appeals the district court's decision denying its request for a new trial on damages. Systems cross-appeals from the court's decisions denying its oral motion for judgment as a matter of law (“JMOL”) as to validity of the D' 754 Patent and denying its post-trial Rule 59(e) motion. Because we find that the district court erred in its assessment of design patent damages under 35 U.S.C. § 289, we vacate the damages award and remand for a new trial on damages. With respect to Systems' cross-appeal, we affirm the district court's decisions: (1) denying Systems' motion for JMOL as to the validity of the D'754 Patent; and (2) denying Systems' Rule 59(e) motion with respect to the 6 ½ foot dock levelers. Accordingly, we affirm in part, vacate in part, and remand for further proceedings.

Background

Nordock and Systems are rivals in the loading dock device industry. Nordock Inc. v. Sys. Inc., 927 F.Supp.2d 577, 582 (E.D.Wis.2013). “Both companies design, manufacture, and sell dock levelers which are mechanical devices used to create a bridge between loading dock surfaces and the surfaces of truck load beds.” Id.

On December 23, 2002, Denis Gleason, the President of Nordock, filed U.S. Patent Application No. 10/328,279 (“the '279 Application”), which ultimately issued as U.S. Patent No. 6,834,409 (“the '409 Patent”). The '409 Patent shows a dock leveler with a deck lift assembly that “has a durable combined lip lug and header plate hinge construction.” '409 Patent, col. 3, ll. 15–16. Although Nordock applied for utility patent protection for the “lug hinge design,” it abandoned prosecution after the application was rejected over the prior art. Nordock, 927 F.Supp.2d at 588.

A. The D'754 Patent

The D'754 Patent—entitled “Lip and Hinge Plate for a Dock Leveler”—was filed as a divisional application claiming priority to the '279 Application. As noted, the D'754 Patent claims the ornamental design of a lip and hinge plate for a dock leveler, as shown and described therein. Figure 1, shown below, provides a general perspective view of the front end of the leveler as claimed:

The D'754 Patent states that Figure 1 “is a perspective view showing the lip and hinge plate for a dock leveler with the lip extended, and the hinge plate secured to a deck frame shown in broken lines.”

B. Systems' Accused Devices

Systems has manufactured and sold dock levelers since the 1960s. Nordock, 927 F.Supp.2d at 594. For approximately 40 years, Systems made its levelers with a “piano style” hinge. Id. Systems' President—Edward McGuire—testified that Systems moved to using a header plate and lug style hinge design “for cost reasons,” and began selling the accused levelers in October 2005. Id.

In its complaint, Nordock accused three different sizes of Systems' mechanically operated dock levelers (“LMP” and “LMD”), and three different sizes of hydraulically operated dock levelers (“LHP” and “LHD”) of infringing the D'754 Patent. The sizes are based on the width of the levelers, which are available in widths of 6 feet, 6 ½ feet, and 7 feet. According to Systems' expert—Richard F. Bero—Systems' average sale price for an LHP/LHD leveler is $2,516, and its operating profit per unit is $433. Joint Appendix (“J.A.”) 6552. Its average sale price for an LMP/LMD leveler is $1,840, with an operating profit per unit of $215. Id.

C. Procedural History

On January 28, 2011, Nordock filed suit against Systems alleging that it infringes the D'754 Patent by making, offering for sale, and selling hydraulic and mechanical dock levelers incorporating the claimed lip lug and hinge plate design. Nordock further alleged that the infringement is willful.

Systems filed an Answer and Counterclaim for declaratory judgment of non-infringement and invalidity. In its counterclaim, Systems alleged that the D' 754 Patent is not infringed and is invalid for failure to comply with the standards of patentability and enforceability set forth in 35 U.S.C. §§ 102, 103, and 112. Systems also asserted a number of affirmative defenses, including laches, estoppel, and unclean hands.

1. Cross–Motions for Summary Judgment

The parties filed cross-motions for summary judgment in September 2012. Specifically, Nordock moved for summary judgment as to validity and enforceability of the D'754 Patent. In that motion, Nordock argued that the design has sufficient ornamentation, the D'754 Patent is not barred by the claims of related utility patent applications, the design is valid under 35 U.S.C. §§ 102, 103, and 112, and enforcement is not barred by reason of laches, estoppel, or unclean hands. Nordock, 927 F.Supp.2d at 589.

For its part, Systems moved for summary judgment of invalidity and noninfringement, arguing that: (1) the D'754 Patent is invalid because it is primarily functional and contains no protectable ornamental features; (2) to the extent there are any features that are not purely functional, those features are obvious in view of the prior art; and (3) a comparison between the patented design and Systems' products reveals that Systems does not infringe. Systems requested that the district court hold a hearing on the motion and construe the scope of the D'754 Patent claim.

The district court conducted a claim construction hearing on January 30, 2013. Id. at 587. Shortly thereafter, the court issued a written decision addressing several motions, including the parties' cross-motions for summary judgment. In relevant part, the court construed the single claim of the D'754 Patent as “[t]he ornamental design of a lip and hinge plate for a dock leveler, as shown and described,” including the seven figures (drawings) of the patent. Id. at 588. The court explained that “the broken lines in the figures do not form any part of the claim,” and that:

[t]he ornamental design of the lip and hinge plate as shown and described includes nine pairs of tear-drop shaped lugs, attached to the header plate and lip to form the hinge, and the pin that is threaded between the lug pairs. The shape of the lug attached to the header plate is not identical to that attached to the lip, and is elongated as shown in Figures 6 and 7 to close the gap between it and the deck.

Id.

Next, the court noted that the design incorporates four primarily utilitarian elements: the lugs, the pin, the header plate, and the lip. Id. at 589. The court found that the “relative positions of the header plate and the lip which are at the front portion of the dock leveler are dictated by the function of a dock leveler; that is, to create a bridge between the truck and the loading dock.” Id. And the “lugs and the pin form a hinge which is essential to the function of the dock leveler.” Id. The court found, however, that there are ornamental aspects of the design: “[w]hile the header plate is used to tie the supporting beams and create a box type of structure, there are alternatives. There are dock levelers that do not have header plates, and there are dock levelers with partially open fronts, and other styles.” Id. (internal citation omitted). And, there are hinges that have no lugs. The court further found that the “shape, spacing, pairing and the difference in shapes between the lugs attached to the header plate and the lip are also ornamental features of the '754 patent.” Id.

Turning to the parties' motions for summary judgment, the court granted Nordock's motion with respect to anticipation, obviousness, prosecution estoppel, laches, equitable estoppel, and unclean hands.Id. at 611. The court found that summary judgment was not appropriate with respect to functionality, however. Id. at 605. In reaching this conclusion, the court noted that: (1) “Nordock's advertising touts the functional qualities of its lip, lug and header plate design;” (2) “there is a great variation in dock leveler design;” (3) there is a “genuine dispute of material fact regarding whether many elements in the design are non-functional;” and (4) “Nordock's design is not the only way to do things.” Id.

2. Trial

The district court conducted a jury trial from March 18 through March 26, 2013, on the issues of infringement, validity, and damages. At trial, Nordock's damages expert—Dr. Stan V. Smith—testified that Systems' net profit for the sale of 1,514 hydraulic levelers (LHP/LHD) was $912,201. J.A. 6009; J.A. 6373. Systems' damages expert—Richard F....