Atlantic Thermoplastics Co., Inc. v. Faytex Corp.

• Decision Date: 13 July 1992
• Docket Number: 91-1095,Nos. 91-1076,s. 91-1076
• Citation: 970 F.2d 834,23 USPQ2d 1481
• Parties: ATLANTIC THERMOPLASTICS CO., INC., James B. Sullivan and Richard B. Fox, Plaintiffs-Appellants, v. FAYTEX CORPORATION, Defendant/Cross-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 834

970 F.2d 834

23 U.S.P.Q.2d 1481

ATLANTIC THERMOPLASTICS CO., INC., James B. Sullivan and Richard B. Fox, Plaintiffs-Appellants, v. FAYTEX CORPORATION, Defendant/Cross-Appellant.

Nos. 91-1076, 91-1095.

United States Court of Appeals,

Federal Circuit.

July 13, 1992.

Rehearing In Banc Denied.

Jack R. Pirozzolo, Willcox, Pirozzolo & McCarthy, Boston, Mass., argued for plaintiffs-appellants. With him on the brief was Richard L. Binder.

Anthony M. Lorusso, Lorusso & Loud, of Boston, Mass., argued for defendant/cross-appellant. With him on the brief was Thomas M. Sanders. Of counsel were John F. Bomster, Alder, Pollock & Sheehan, Inc., Providence, R.I. and George A. Loud, Arlington, Va.

Before ARCHER, MICHEL, and RADER, Circuit Judges.

RADER, Circuit Judge.

Atlantic Thermoplastics owns U.S. Patent No. 4,674,204 ('204 patent) entitled "Shock Absorbing Innersole and Method of Preparing Same." Atlantic sued Faytex Corporation ¹ for infringing the '204 patented process with innersoles manufactured by two separate processes. After a bench trial, the United States District Court for the District of Massachusetts held that Faytex infringed the '204 patent by selling innersoles manufactured by Surge, Inc. The court held, however, that Faytex did not infringe the '204 patent by selling innersoles manufactured by Sorbothane, Inc. Atlantic Thermoplastics Co. v. Faytex Corp., No. 88-0210-H (D.Mass. July 27, 1990). The trial court also determined that the '204 patent is not invalid under the on-sale bar of 35 U.S.C. § 102(b) (1988).

This court affirms the district court's infringement determination. Because unable to determine whether the district court applied the correct legal standards under section 102(b), this court vacates the district court's judgment as to validity and remands for findings on the on-sale issue. Because the trial court improperly determined damages, this court also remands for recalculation of lost profits, if liability is again established.

BACKGROUND

The '204 patent contains both process claims and product-by-process claims for a shock absorbing shoe innersole. The innersole is formed in a mold having a contoured heel and arch section. Two different materials combine to make the innersole: an elastomeric material in the heel section, and a polyurethane foam. The elastomeric heel insert enhances shock absorption. The polyurethane foam forms around the heel insert and supplies the rest of the innersole.

Claim 1 of the '204 patent defines the process:

In a method of manufacturing a shock-absorbing, molded innersole for insertion in footwear, which method comprises:

(a) introducing an expandable, polyurethane into a mold; and

(b) recovering from the mold an innersole which comprises a contoured heel and arch section composed of a substantially open-celled polyurethane foam material, the improvement which comprises:

(i) placing an elastomeric insert material into the mold, the insert material having greater shock-absorbing properties and being less resilient than the molded, open-celled polyurethane foam material, and the insert material having sufficient surface tack to remain in the placed position in the mold on the introduction of the expandable polyurethane material so as to permit the expandable polyurethane material to expand about the insert material without displacement of the insert material; and (ii) recovering a molded innersole with the insert material having a tacky surface forming a part of the exposed bottom surface of the recovered innersole.

Faytex distributes half-sole innersoles, or heel cups, with an elastomeric heel insert. Two different manufacturers--Surge Products and Sorbothane--make Faytex's innersoles. The Surge process for making innersoles differs from the Sorbothane process. Surge first manually places a solid elastomeric insert into the heel section of the innersole mold. Surge then injects polyurethane around the solid heel insert to form the innersole. Sorbothane, on the other hand, first injects a liquid elastomeric precursor into the mold, which solidifies to form the heel insert. While the heel insert is solidifying, Sorbothane injects polyurethane into the same mold to form the rest of the innersole.

The parties agree that the Surge process infringes the '204 patent. The district court concluded that the Sorbothane process did not infringe the '204 patent. The district court read the claims to require placement of a solid elastomeric insert into the mold. This reading leaves injection of liquid elastomers outside the scope of the claims. Atlantic contests this construction.

Because Faytex does not manufacture the innersoles, Atlantic cannot charge Faytex with infringement of the process claims. However, claim 24 of the '204 patent states: "The molded innersole produced by the method of claim 1." Atlantic argues that Faytex, by distributing products allegedly made by the claimed process, is liable as an infringer. Faytex cross-appeals from the award of lost profit damages for the sale of Surge and Sorbothane innersoles. Faytex also appeals the district court's determination that the '204 patent is not invalid under the on-sale bar of 35 U.S.C. § 102(b).

DISCUSSION

I. On Sale Bar

Faytex asserts that the '204 patent is invalid because the claimed invention was on sale more than one year before the filing date of the application. Faytex bears the burden of showing invalidity under section 102(b) by clear and convincing evidence. See Buildex Inc. v. Kason Indus., 849 F.2d 1461, 1462-63, 7 USPQ2d 1325, 1326-27 (Fed.Cir.1988). To prevail, Faytex had to show that Atlantic sold or offered for sale the claimed innersole before October 9, 1984. A single sale or offer to sell suffices to bar patentability. In re Caveney, 761 F.2d 671, 676, 226 USPQ 1, 4 (Fed.Cir.1985). This court must determine whether the district court erred in concluding that Faytex did not meet its burden.

Appellate review of an on-sale bar proceeds as a question of law. U.S. Environmental Prods. v. Westall, 911 F.2d 713, 715, 15 USPQ2d 1898, 1900 (Fed.Cir.1990). Thus, this court reviews the trial court's conclusion de novo, with factual findings underlying that conclusion subject to review for clear error. Manville Sales v. Paramount Sys., 917 F.2d 544, 549, 16 USPQ2d 1587, 1591 (Fed.Cir.1990); Moleculon Research v. CBS, Inc., 793 F.2d 1261, 1266, 229 USPQ 805, 808 (Fed.Cir.1986), cert. denied, 479 U.S. 1030, 107 S.Ct. 875, 93 L.Ed.2d 829 (1987).

To invoke the on-sale bar, a defendant must prove that the complete claimed invention is embodied in or obvious in view of the thing sold or offered for sale before the critical date. UMC Elecs. Co. v. United States, 816 F.2d 647, 656, 2 USPQ2d 1465, 1471 (Fed.Cir.1987), cert. denied, 484 U.S. 1025, 108 S.Ct. 748, 98 L.Ed.2d 761 (1988). The on-sale bar invalidates a patent for an invention offered for sale, even though not ready for satisfactory commercial marketing. Barmag Barmer Maschinenfabrik AG v. Murata Mach., 731 F.2d 831, 838, 221 USPQ 561, 567 (Fed.Cir.1984). If a patent owner seeks to avoid the on-sale bar on the basis that a sale or offer was experimental, UMC, 816 F.2d at 657, a trial court must determine whether the patent owner sought the sale primarily for profit rather than as part of a testing program. To determine whether profit motivated a transaction, a court must examine the claimed features, In re Smith, 714 F.2d 1127, 1136, 218 USPQ 976, 984 (Fed.Cir.1983) the offeror's objective intent, and the totality of the circumstances, U.S. Environmental Products, 911 F.2d at 716.

Despite the many issues affecting any application of the on-sale bar rule, the district court's sole finding in this case consists of a conclusory statement:

[Atlantic's] first offer to sell and a definite sale were made to Triangle Corporation after October 9, 1984 in January of 1985, as the invention was not commercially marketable before that time....

Atlantic Thermoplastics, slip op. at 26. The district court did not provide any findings of fact or analysis for its conclusion. Moreover, the district court's finding does not consider several offers to sell before October 1984. The district court apparently assumed, incorrectly, that mere offers do not trigger the on-sale bar rule. In any event, in the absence of findings, this court cannot determine whether the trial court properly considered those offers of sale and therefore applied the correct legal standard.

After a bench trial, a trial court must put forth the findings of fact relied upon to justify its actions. Fed.R.Civ.P. 52(a). Without findings, this court has no basis to evaluate whether the district court's analysis uses the proper legal standard. Cf. Nutrition 21 v. United States, 930 F.2d 867, 869, 18 USPQ2d 1347, 1349 (Fed.Cir.1991) (preliminary injunction). Because the absence of findings goes to the heart of the issue, any error cannot be harmless error. Therefore, this court vacates the district court's judgment on validity and remands for a proper on-sale analysis.

II. Infringement

The district court determined that infringement turned on the proper interpretation of two claim limitations: "placing an elastomeric insert material into the mold" and "the insert material having sufficient surface tack to remain in the placed position on the introduction of the expandable polyurethane material." Atlantic Thermoplastics, slip op. at 14. According to the trial court, these limitations

describ[e] a method of manufacturing innersoles by which a solid or cellular preformed elastomeric insert material is manually placed or put in the heel portion of the mold and an open-celled expandable polyurethane foam material is then injected or poured into the mold so as to expand about the solid preformed elastomeric insert material without displacement of the insert material.

Id. at 15. The court further held that the claim requires that the solid insert material be held in position by...