Minco, Inc. v. Combustion Engineering, Inc., s. 96-1005

• Citation: 95 F.3d 1109,40 USPQ2d 1001
• Decision Date: 10 September 1996
• Docket Number: 96-1033,Nos. 96-1005,s. 96-1005
• Parties: MINCO, INC., Plaintiff/Cross-Appellant, v. COMBUSTION ENGINEERING, INC., Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1109

95 F.3d 1109

40 U.S.P.Q.2d 1001

MINCO, INC., Plaintiff/Cross-Appellant, v. COMBUSTION ENGINEERING, INC., Defendant-Appellant.

Nos. 96-1005, 96-1033.

United States Court of Appeals,

Federal Circuit.

Sept. 10, 1996.

Rehearing Denied; Suggestion for Rehearing In Banc Declined

Nov. 18, 1996.

James R. Higgins, Jr., Middleton & Reutlinger, Louisville, Kentucky, argued for plaintiff/cross-appellant. With him on the brief were Thomas P. O'Brien, III. Of counsel were Robert E. Pitts, R. Bradford Brittian, Melinda L. Doss, and Raymond E. Stephens, Pitts & Brittian, Knoxville, Tennessee. Also of counsel was Charles R. Terry, Terry, Terry & Stapleton, Morristown, Tennessee.

Gary M. Ropski, Willian Brinks, Hofer Gilson & Lione, Chicago, Illinois, argued for defendant-appellant. With him on the brief were John J. Pavlak, Cynthia A. Homan, and Curt J. Whitenack.

Before RADER, Circuit Judge, COWEN, Senior Circuit Judge, and SCHALL, Circuit Judge.

PER CURIAM.

In this patent infringement case, Combustion Engineering, Inc. (CE) appeals and Minco, Inc. cross-appeals a final decision of the United States District Court for the Eastern District of Tennessee. The patent at issue, 4,217,462 (the '462 patent), claims a rotary furnace for fusing minerals. The district court found CE willfully infringed claims 3 and 4 of the '462 patent. The court also found that these claims were neither invalid nor unenforceable and that laches did not apply. The court awarded damages of $3,455,329 and a reasonable royalty of $7,408,179.40. Because the infringement was willful, the court doubled the damages for an overall award of $21,727,016.80 plus attorneys fees and pre-judgment interest. Because the record supports the district court's findings and conclusions, this court affirms.

BACKGROUND

As one way to fuse silica, an operator first puts high purity sand into a barrel-shaped, rotary furnace. External drive wheels then rotate the furnace to throw the sand against the furnace walls. Graphite electrodes then enter the furnace through openings at either end. These rods create a high energy arc which heats and fuses the silica. Finally, the operator dumps the ingot of fused silica out of the furnace. Once crushed, the fused silica has many applications, particularly in semiconductor technology.

CE and its predecessor produced fused silica and fused magnesia. During 1976-1977, CE used a rotary "jumbo kiln" to fuse these minerals. In July 1977, CE released Ken Jenkins, who then began experimenting in his barn to solve problems in fusion furnaces, such as CE's jumbo kiln. With input from another former CE employee, William Rawles, Jenkins developed the claimed furnace. This new furnace more efficiently produced a better quality of fused silica than CE's jumbo kiln.

In September 1977, Jenkins and his sister Verneil Richards formed Minco, Inc. to produce fused silica. Ultimately, they used their new rotary furnace in that endeavor. Fused silica from their invention enjoyed substantial commercial success. The new furnace produced fused silica with less discoloration and lower iron contamination than CE's product. Many purchasers found these qualities commercially attractive. Minco's net sales increased annually from 1979 through 1985.

In May 1978, Jenkins and Rawles filed a patent application claiming, in claims 1 and 2, their rotary furnace. In April 1979, they filed a continuation-in-part application adding claims 3 and 4. These added claims covered a rotary furnace in combination with crane supports for lifting and tilting the furnace housing. In August 1980, the '462 patent issued.

Before October 31, 1988, Minco owned no rights in the '462 patent. On February 23, 1988, Rawles assigned his interest in the '462 patent to Richards, "including all rights of action and damages for past infringement." On October 31, 1988, Minco Acquisition Corporation (MAC), an investment group formed to acquire Minco, purchased Minco and the patent from Jenkins and Richards. This transaction included three documents:

(1) a long form patent assignment, assigning the '462 patent from Jenkins and Richards to MAC;

(2) a short form of the first assignment for recording the assignment at the PTO; and

(3) an assignment of the '462 patent from MAC to Minco.

At the behest of CE and others, the patent underwent reexamination. During reexamination, the Patent and Trademark Office (PTO) found claims 1 and 2--directed to only the rotary furnace--obvious in view of prior art. After modification, claims 3 and 4 issued to Minco on October 12, 1993. These claims are directed to a rotary furnace "for the continuous electric heating and/or fusion of mineral bearing substances." The furnace comprises a number of features including "a cylindrical housing, said housing having a first conical extension fixed to one end thereof and a second removeable conical extension detachably secured to an opposite end thereof." The claims also specify "a crane support mounted upon each said housing and removable conical extension for lifting and tilting the housing to remove the contents thereof." (Emphasis omitted). In allowing claims 3 and 4, the examiner reasoned: "[N]o prior art furnace ... teaches the use of a crane support on the cylindrical housing and a crane support on the removable conical end ... so that the [furnace] can be lifted and transported to dump the finished product through the removable end."

Minco's early success cut into CE's market. In 1985, for instance, CE's sales dropped approximately 20%. In response, CE tried to develop a comparable furnace but failed. In December 1983, CE obtained a copy of the '462 patent. Later CE hired an outside consultant, Nick Valk, to design a kiln capable of matching Minco's high quality silica. In an initial meeting with Valk, CE showed him a drawing similar to one in the '462 patent. With Valk's assistance, CE developed the accused RT kiln. In February The accused RT kiln has three sections: a main cylindrical housing, a fixed conical extension off of the main cylindrical housing, and another conical extension which detaches. After firing the silica, a crane lifts the furnace from the drive mechanism. The crane attaches to a support at the center of the cylindrical housing. The entire housing then moves to a sand pan. At the sand pan, an operator loosens the bolts and swings away the removable, conical extension. A crane, through the crane support, holds the extension during detachment. At that point, additional cranes lift and tilt the furnace to dump the ingot of fused silica. Regarding this operation, the trial court found: "[T]he crane support on the detachably secured conical extension ... performs the function of removing or lifting away the extension so that the remainder of the housing can be lifted and tilted via the crane support mounted on the cylindrical section of the housing."

of 1986, CE began to manufacture fused silica in its RT kiln. With fused silica from the RT kiln, CE's sales volume increased annually.

The parties tried the issues in this case to the bench from August 16 to August 23, 1994. The trial court found in favor of Minco. CE appealed to this court. CE contests the trial court's judgment on infringement, intervening rights, best mode, pre-assignment damages, calculation of the reasonable royalty, entitlement to lost profits, and willful infringement. Minco's cross-appeal challenges the trial court's denial of price erosion damages and of lost profits on CE's sale of its business, including the infringing kilns.

DISCUSSION

The trial court made ample findings of fact upon which this court relies in reaching its decision. Moreover, the trial court's sound legal conclusions permit this court to abbreviate its presentation of many issues. For instance, this court affirms with respect to the willfulness of CE's infringement based on the trial court's findings and conclusions.

With regard to the central issue of nearly every patent appeal, claim construction, the district court reached an interpretation fully supported by the record. See Markman v. Westview Instruments, Inc., --- U.S. ----, ---- - ----, 116 S.Ct. 1384, 1395-96, 134 L.Ed.2d 577, 38 U.S.P.Q.2d 1461, 1470-71 (1996). Claims 3 and 4 of the '462 patent call for two crane supports--one on the main housing and another on the removable conical extension "for lifting and tilting the housing and removing the contents thereof." Construing this limitation, the trial court held that "both such crane supports [must be] involved in facilitating the lifting and tilting of the housing 'so that' the contents of the furnace ... can be removed out the detachably secured end." The trial court did not construe this language to require that the crane supports actually lift and tilt the furnace housing.

The claim language and the patent specification support this interpretation. The claim language does not require each crane support to actually lift and tilt the furnace housing. The claims specify only use of the crane supports during lifting and tilting. Indeed, as is evident to one of ordinary skill in rotary furnace operations, crane supports alone do not lift a furnace. Rather a crane lifts the weight of the furnace. The supports, by their nature, only facilitate this lifting process by connecting the furnace to the crane.

The specification further supports the trial court's construction. In relevant part, the specification provides: "[U]pon completion of the fusion process, the entire kiln is crane lifted from the driving cradle support 156 and the cone 120' removed, whereupon the kiln is tilted and the formed ingot dumped." This language in the specification discloses that removal of the detachable extension precedes the tilting process. Thus, the district court correctly determined that the patent does not require that the crane support on the detachable end receive force that directly tilts the housing. Rather, the specification suggests...