Polara Eng'g Inc. v. Campbell Co.

• Decision Date: 10 July 2018
• Docket Number: 2017-1974, 2017-2033
• Citation: 894 F.3d 1339
• Parties: POLARA ENGINEERING INC, a California Corporation, Plaintiff–Cross-Appellant v. CAMPBELL COMPANY, an Idaho Corporation, Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

894 F.3d 1339

POLARA ENGINEERING INC, a California Corporation, Plaintiff–Cross-Appellant

v.CAMPBELL COMPANY, an Idaho Corporation, Defendant–Appellant.

2017-1974, 2017-2033

United States Court of Appeals, Federal Circuit.

Decided: July 10, 2018

Nathaniel L. Dilger, One LLP, Newport Beach, CA, argued for plaintiff–cross-appellant.

Christopher T. Holland, Holland Law LLP, San Francisco, CA, argued for defendant–appellant. Also represented by Lori Holland.

Before Lourie, Dyk, and Hughes, Circuit Judges.

Lourie, Circuit Judge.

Campbell Company ("Campbell") appeals from the final judgment of the United States District Court for the Central District of California entering judgment in favor of Polara Engineering Inc. ("Polara") on its claim for infringement of claims 1–4 ("the asserted claims") of U.S. Patent 7,145,476 ("the ’476 patent") and its decision, following a jury trial, denying Campbell’s post-trial motions for judgment as a matter of law of invalidity and no willfulness, and granting Polara’s motion to enhance the damages award. See Polara Eng’g, Inc. v. Campbell Co. , 237 F.Supp.3d 956 (C.D. Cal. 2017) (" Post-trial Motions Opinion "); Judgment, Polara Eng’g, Inc. v. Campbell Co. , No. SACV–13–00007 (C.D. Cal. Mar. 31, 2017), ECF No. 499 (J.A. 83–84). For the following reasons, we affirm in part, vacate in part, and remand.¹

BACKGROUND

I

Polara, a manufacturer of accessible pedestrian signal systems ("APS") and pedestrian push buttons, owns the ’476 patent. Polara originally entered the APS market with an eight-wire system called the Navigator. Because many intersections only have two wires, installation of eight-wire systems like the Navigator could be difficult and labor-intensive. In about late 2000 or early 2001, Polara engineers Leslie Beckwith and Randy Cruz, the named inventors listed on the ’476 patent, began designing a two-wire version of the Navigator. Their work led to the ’476 patent.

The ’476 patent relates to a two-wire control system for push-button crosswalk stations for a traffic-light-controlled intersection with visual, audible, and tactile accessible signals. These signals "enable both sighted and visually impaired pedestrians to receive information concerning the status of the intersection to be crossed once vehicular traffic has been halted." ’476 patent col. 2 ll. 21–24. The patent discloses using a DC signal to provide both power and digital data over two wires to control the system. Id. col. 2 l. 44–col. 3 l. 11, col. 4 ll. 43–63, Fig. 3. The patent explains the benefits of using "the existing underground wire pairs to transmit power and data signals in order to generate the accessible signal functions for both sighted and visually impaired pedestrians." Id. col. 2 ll. 1–9.

Claim 1 of the ’476 patent is representative and reads as follows:

A control system by which vibro-tactile messages are provided to alert pedestrians when to cross a traffic light controlled intersection, said control system comprising:

at least one push button station located at the traffic light controlled intersection to be crossed by pedestrians, said push button station including a push button head that is depressed by the pedestrians and message generating means adapted to cause said push button head to vibrate to provide a tactile indication to a visually impaired pedestrian when to cross the intersection; and

a control unit that is responsive to the depression of the push button head of said push button station to transmit to the push button station both power and digital data signals over a single pair of wires by which to power and control the operation of said message generating means .

Id. col. 9 l. 56–col. 10 l. 4 (emphasis added).

Polara filed the application that led to the ’476 patent on August 5, 2004. The critical date for purposes of pre–AIA 35 U.S.C. § 102(b) (2006)² is thus August 5, 2003. In September 2003, Polara began selling the Navigator–2, a two-wire APS system that practices the asserted claims.

II

Prior to the critical date, Polara tested prototypes that satisfied the limitations of the asserted claims. Polara first developed a prototype that it tested in its laboratory. In January 2002, it tested the prototype in its parking lot. It also sent a letter to the traffic engineer for the City of Fullerton, California requesting permission to install a prototype system at the intersection of Gilbert Street and Commonwealth Avenue. The letter explained that the intersection was "close to [Polara’s] plant" so they could "monitor it daily during the test phase." J.A. 3728. The letter also stated that Polara "would take full responsibility for installing, maintaining and deinstalling [sic] the equipment," and that the City of Fullerton "would need to provide a responsible representative to open the intersection cabinet for installation and deinstallation [sic] of the system" and maybe a few other times during the test period. Id.

Following the city’s agreement, in March 2002, Polara installed a prototype in Fullerton at the intersection of Gilbert Street and Commonwealth Avenue ("First Installation"). Because that prototype immediately failed, Polara ran tests and uninstalled it. Polara determined that the problem was with electrical noise impacting the digital data signal. Based on this determination, Polara modified the transmitting and receiving circuitry of the prototype and then reinstalled it at the same intersection. The modification process took a few months. Following reinstallation, Polara monitored the operation of the First Installation for a couple of months and then uninstalled it.

Polara subsequently installed a prototype in Fullerton at the intersection of Nutwood Avenue and College Boulevard ("Second Installation"), a larger intersection with a different configuration than at the location of the First Installation. The Second Installation initially experienced intermittent problems with the digital data signal communication resulting in Polara modifying the prototype’s circuitry. The Second Installation was in use from fall 2002 to fall 2003. Polara’s president testified that they "continued to monitor it and consider it a test intersection ... until the official release of the [Navigator–2] device at the August 24[, 2003] trade show." J.A. 3000–01; see also J.A. 2517–18 (inventor testimony regarding testing and monitoring of the Second Installation).

Polara did not enter into a confidentiality agreement with the City of Fullerton with respect to the First and Second Installations. Polara witnesses testified that they did not tell anyone from the city how the prototype worked and that a person could not determine how the device worked once it was installed merely by looking at it. According to the terms of the January 2002 letter, Polara employees installed, uninstalled, and performed testing of the prototypes at the First and Second Installations.

In January 2003, Polara had a prototype installed in Burnaby, Canada. Polara entered into an agreement with the City of Burnaby to test the prototype and keep the information concerning the prototype and its testing confidential. J.A. 3745–46. The City of Burnaby arranged for Cobra Electric to install and monitor the test system and Polara also had Cobra sign a confidentiality agreement. J.A. 3748. Polara selected Burnaby as a test location because of the different environmental conditions, e.g. , heavy rain and snowfall, than in Fullerton.

III

In or around 2008, Campbell, a manufacturer of traffic-industry products, began collaborating with Dr. Richard Wall of the University of Idaho to develop an APS. That collaboration led to the development of Campbell’s Advisor Advanced Accessible Pedestrian Station ("AAPS"), a two-wire APS.

In May 2008, Dr. Wall and Campbell personnel corresponded regarding the system under development and the ’476 patent and discussed the possibility of developing a three-wire APS. Dr. Wall identified what he termed "significant differences" and "similarities" between the ’476 patent and proposed APS. J.A. 3362. The "similarities" included "two wire communications over power line." Id. Dr. Wall subsequently sent an email to Phil Tate, Campbell’s president, stating "I have my design team on it—we may have a 3 wire solution." J.A. 3829. Mr. Tate testified that one reason he wanted to consider a three-wire solution was that "[i]t would make it much cleaner" in light of the ’476 patent. J.A. 2571.

Dr. Wall also discussed the ’476 patent with a technology transfer attorney employed by the University of Idaho, Michael Jones, and reported his conversation to Mr. Tate. Mr. Jones identified "areas of potential conflict" with the APS being developed and third-party patent rights, including the ’476 patent. J.A. 2572–73, 2575. As of May 2008, Mr. Jones had not given a two-wire APS "a clean bill of health." J.A. 2574.

Around the same time period, Mr. Tate also discussed the ’476 patent with an attorney named Bob Shaver, and received a written analysis of the patent from his law firm. The document begins by stating that "[a]ll but one claim in the [ ’476 ] patent [is] limit[ed] to the 2–wire configuration as previously discussed. Claim 11 does not have this limitation." J.A. 3832. The remainder of the document focuses on claim 11, and does not provide an analysis of the validity of the asserted claims or any infringement analysis. This was the only written communication Campbell received from a law firm that opines on the ’476 patent.

IV

On January 2, 2013, Polara filed this patent infringement suit against Campbell. The district court subsequently granted Polara’s motion for partial summary judgment that Campbell’s AAPS infringes claims 1–4 of the ’476 patent. See Polara Eng’g, Inc. v. Campbell Co. , No. SACV–13–00007, slip op., 2014 WL 12577410 (C.D. Cal. June 10, 2014) (J.A. 1–15). The AAPS transmits both AC power and data via Ethernet over Powerline ("EoP") packets using orthogonal frequency division modulation ("OFDM") to the...