Bba Nonwovens Simpsonville v. Superior Nonwovens

• Decision Date: 30 August 2002
• Docket Number: No. 02-1059.,No. 02-1053.,No. 02-1101.,02-1053.,02-1059.,02-1101.
• Citation: 303 F.3d 1332
• Parties: BBA NONWOVENS SIMPSONVILLE, INC., Reemay, Inc., and Fiberweb France SA, Plaintiffs-Cross Appellants, v. SUPERIOR NONWOVENS, LLC and Lloyd E. Trimble, Defendants-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

303 F.3d 1332

BBA NONWOVENS SIMPSONVILLE, INC., Reemay, Inc., and Fiberweb France SA, Plaintiffs-Cross Appellants, v. SUPERIOR NONWOVENS, LLC and Lloyd E. Trimble, Defendants-Appellants.

No. 02-1053.

No. 02-1059.

No. 02-1101.

United States Court of Appeals, Federal Circuit.

DECIDED: August 30, 2002.

Rehearing Denied October 7, 2002.

COPYRIGHT MATERIAL OMITTED

William M. Atkinson, Alston & Bird, LLP, of Charlotte, North Carolina, argued for plaintiffs-cross appellants. With him on the brief were John P. Higgins and Kirk T. Bradley.

H. Sam Mabry, II, Haynsworth Sinkler Boyd, P.A., of Greenville, South Carolina, argued for defendants-appellants. With him on the brief were W. David Conner and Kevin A. Kauer. Of counsel on the brief were Albert L. Underhill and James D. Withers, Merchant & Gould, P.C., of Minneapolis, MN.

Before NEWMAN, LINN, and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge LINN. Dissenting opinion filed by Circuit Judge DYK.

LINN, Circuit Judge.

Superior Nonwovens, LLC and Lloyd E. Trimble ("Superior") appeal the decision of the district court denying Superior's post-trial motions for judgment as a matter of law ("JMOL") and for a new trial. The district court's judgment followed a jury verdict in favor of Fiberweb France SA ("Fiberweb France") on its trade secret claim and in favor of BBA Nonwovens Simpsonville, Inc. ("BBA") on its patent infringement claim. Superior further appeals the district court's order permanently enjoining Superior from using, selling, or otherwise disclosing the trade secrets of Fiberweb France. Reemay, Inc. ("Reemay") cross-appeals the district court's order denying Reemay's motion for a new trial. Fiberweb France seeks modification of the district court's order that 10 percent of Superior's net sales be placed in escrow pending appeal. Because the district court did not err in denying Superior's motions for JMOL and a new trial, and because the district court did not abuse its discretion in declining to instruct the jury on the Servo case or in forming the escrow order, we affirm.¹

BACKGROUND

BBA, Fiberweb France, Reemay, and Superior are commercial manufacturers of spunbond nonwoven fabrics used in the production of other products, such as dryer sheets, filters, and carpet underlay. BBA, formerly known as Fiberweb North America, is affiliated with Fiberweb France and Reemay, as all three companies are owned by BBA Group PLC (a UK corporation).

Superior was formed in early 1998 by several former employees and consultants of Fiberweb France, BBA and Reemay. These former employees include President Lloyd E. Trimble and Vice-President Scott Gessner. Superior's goal was to produce nonwoven fabric in competition with Fiberweb France, BBA, and Reemay.

The technology at issue relates to the manufacture of spunbond nonwoven fabric. The manufacturing process begins with polymer pellets that are melted and extruded through a spinneret to form long discrete polymer filaments. The filaments are cooled with air from "quench chambers," stretched to provide strength, electrostatically charged so the filaments don't bunch together, and deposited onto a moving "laydown belt" to form a nonwoven web of fabric. The web is then bonded, sometimes using a consolidator, and wound for later conversion into end products.

Three distinct disputes, relating to three distinct technologies used in the manufacturing process, are at issue in this appeal. First, Fiberweb France asserted that Superior willfully misappropriated its trade secret quench chamber technology. Second, BBA asserted that Superior willfully infringed its U.S. Patent No. 5,397,413 ("the `413 patent") directed to an apparatus and method for producing a web of thermoplastic filaments, including claims reciting a slot-draw attenuator with a corona device positioned to electrostatically charge the filaments. Third, Reemay asserted that Superior willfully misappropriated its trade secret steam consolidator technology.

BBA and Reemay brought suit against Superior in the U.S. District Court for the District of South Carolina on September 6, 2000, alleging trade secret misappropriation and patent infringement. Fiberweb France was later added as a plaintiff for trade secret misappropriation. Following expedited discovery, the district court on August 9, 2001 held a Markman hearing, and on August 17, 2001 issued a Markman ruling construing claims 1, 8, 9, and 13 of BBA's `413 patent. On August 20-31, 2001, a jury trial was conducted.

The jury returned a verdict in favor of Fiberweb France on its trade secret claim, in favor of BBA on its patent infringement claim (claims 1, 8, 9, and 13), but against Reemay on its trade secret claim. The jury found that Superior's misappropriation of Fiberweb France's trade secrets was "willful, wanton, or reckless" and awarded actual damages of $2,620,275.00. The jury further found that Superior's infringement of BBA's `413 patent was willful and awarded actual damages of $50,000.

On November 1, 2001, the district court denied Superior's motions for JMOL or a new trial, and awarded, in addition to the actual damages found by the jury, punitive damages of $1,310,137.50 on Fiberweb France's trade secret claim, and enhanced damages of $50,000 on BBA's patent infringement claim. The district court also permanently enjoined Superior from using or otherwise disclosing Fiberweb France's trade secrets and from using the electrostatic apparatus of BBA's `413 patent. On motion of Superior, the district court stayed the injunction as to Fiberweb France's trade secret and imposed a royalty escrow procedure in which 10 percent of Superior's net sales were placed in escrow pending appeal. Superior did not oppose imposition of the injunction as to the `413 patent during appeal.

We have jurisdiction of this appeal pursuant to 28 U.S.C. § 1295(a)(1), where a patent infringement claim was raised for the first time in the complaint, see Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc., ___ U.S. ___, ___, 122 S.Ct. 1889, 1893, 153 L.Ed.2d 13 (2002), including pendent jurisdiction of the claims for trade secret misappropriation, see Roton Barrier, Inc. v. Stanley Works, 79 F.3d 1112, 1116, 37 USPQ2d 1816, 1819 (Fed. Cir.1996) (citing Rhone-Poulenc Specialites Chimiques v. SCM Corp., 769 F.2d 1569, 1571, 226 USPQ 873, 874 (Fed.Cir.1985)).

DISCUSSION

Standard of Review

The denial of a motion for judgment as a matter of law is a procedural issue not unique to patent law, and thus we apply the law of the regional circuit where the appeal from the district court would normally lie. See Sjolund v. Musland, 847 F.2d 1573, 1576, 6 USPQ2d 2020, 2023 (Fed.Cir.1988). In this case, that is the Fourth Circuit. The Fourth Circuit reviews de novo a district court's denial of a motion for judgment as a matter of law. S. Atl. Ltd. P'ship of Tenn., L.P. v. Riese, 284 F.3d 518, 532 (4th Cir.2002) (citing Konkel v. Bob Evans Farms Inc., 165 F.3d 275, 279 (4th Cir.1999)). According to the Fourth Circuit, a motion for judgment as a matter of law should be granted if a district court determines, without weighing the evidence or considering the credibility of the witnesses, that substantial evidence does not support the jury's findings. See White v. County of Newberry, 985 F.2d 168, 172 (4th Cir.1993).

The denial of a motion for a new trial likewise is a procedural issue not unique to patent law. Thus, we apply the law of the regional circuit to the Rule 50(b) issue as we do with the JMOL issue. Southwest Software, Inc. v. Harlequin Inc., 226 F.3d 1280, 1290, 56 USPQ2d 1161, 1168 (Fed.Cir.2000). In reviewing a district court's decision on a Rule 50(b) motion, Fourth Circuit law instructs that we must "view all the evidence in the light most favorable to the prevailing party and draw all reasonable inferences in his or her favor." S. Atl., 284 F.3d at 532. The Fourth Circuit reviews a denial of a motion for a new trial under Rule 50(b) for abuse of discretion. See Konkel, 165 F.3d at 279; Bristol Steel & Iron Works, Inc. v. Bethlehem Steel Corp., 41 F.3d 182, 186 (4th Cir.1994).

Federal courts apply the trade secret law of the appropriate state. See Water Techs. Corp. v. Calco, Ltd., 850 F.2d 660, 670, 7 USPQ2d 1097, 1105 (Fed.Cir.1988). In the case at bar, the defendants-appellants have a principal place of business and/or reside in South Carolina, and all acts of alleged trade secret misappropriation occurred in South Carolina, thus we apply the trade secret law of the State of South Carolina. See Sun Studs, Inc. v. Applied Theory Assocs., Inc., 772 F.2d 1557, 1561, 227 USPQ 81, 83 (Fed.Cir.1985).

Claim interpretation raises issues of law that this court reviews de novo. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456, 46 USPQ2d 1169, 1174 (Fed. Cir.1998) (en banc); Markman v. Westview Instruments, Inc., 52 F.3d 967, 979, 34 USPQ2d 1321, 1329 (Fed.Cir.1995) (en banc), aff'd, 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996).

I. Superior's Appeals

Superior appeals the district court's decisions denying Superior's motions for JMOL or for a new trial with regard to Fiberweb France's claim of willful, wanton, or reckless misappropriation of trade secrets, and to BBA's claim of willful infringement of the `413 patent. We first address Fiberweb France's trade secret claim, and then discuss BBA's patent infringement claim.

A. Fiberweb France's Trade Secret

Superior argues that Fiberweb France failed to show the existence of a trade secret under South Carolina law. Superior further contends that the record lacks substantial evidence of (i) misappropriation of a trade secret by Superior, and (ii) "willful, wanton, or reckless" misappropriation by Superior, sufficient to support the jury's verdict.

1. Existence of Trade Secret

Superior argues that Fiberweb France failed to prove at trial that its trade secret technology satisfied each of the statutory requirements for existence of a trade...