Brown & Williamson Tobacco Corp. v. Phillip Morris Inc.

• Citation: 56 USPQ2d 1456,229 F.3d 1120,2000 WL 1528923
• Parties: (Fed. Cir. 2000) BROWN & WILLIAMSON TOBACCO CORPORATION, Plaintiff-Appellant, v. PHILIP MORRIS INCORPORATED, Defendant-Cross Appellant. 99-1389, -1403 DECIDED:
• Decision Date: 17 October 2000
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1120

229 F.3d 1120 (Fed. Cir. 2000)

BROWN & WILLIAMSON TOBACCO CORPORATION, Plaintiff-Appellant, v. PHILIP MORRIS INCORPORATED, Defendant-Cross Appellant.

99-1389, -1403

United States Court of Appeals for the Federal Circuit

DECIDED: October 17, 2000

Appealed from: United States District Court for the Western District of Kentucky, Chief Judge Charles R. Simpson, III

[Copyrighted Material Omitted]

Stephen R. Smith, Morgan & Finnegan, L.L.P., of New York, New York, argued for plaintiff-appellant. With him on the brief were John A. Diaz, Robert E. Paulson, Harry C. Marcus, and Andrea L. Wayda. Of counsel were Marc G. Schildkraut, and James W. Gould.

Peter T. Grossi, Jr., Arnold & Porter, of Washington, DC, argued for defendant-cross-appellant. With him on the brief were Michael D. Daneker, and Amy K. Phillips. Of counsel on the brief were Donald R. Dunner and Karen F. Stoll, Finnegan, Henderson, Farabow, Garrett & Dunner, of Washington, DC. Also of counsel on the brief was William D. Grubbs, Woodward, Hobson & Fulton, of Louisville, Kentucky.

Before CLEVENGER, BRYSON, and LINN, Circuit Judges.

LINN, Circuit Judge.

Brown & Williamson Tobacco Corp. ("B&W") and Philip Morris Inc. ("PM") seek review of a judgment entered April 1, 1999 by the United States District Court for the Western District of Kentucky. See Brown & Williamson Tobacco Corp. v. Philip Morris Inc., No. 3:89CV-0470-S (W.D. Ky. Apr. 1, 1999) (judgment); Brown & Williamson Tobacco Corp. v. Philip Morris Inc., No. 3:89CV-0470-S (W.D. Ky. Apr. 1, 1999) (findings of fact and conclusions of law) ("B&W Opinion"). B&W appeals the district court's holding that claims 1, 4, and 11 of U.S. Reissue Patent No. 32,615 (the "Luke patent" or "'615 patent") were invalid for obviousness over the prior art.¹ PM cross-appeals the district court's holdings that: (1) claims 1, 4, and 11 of the Luke patent were infringed² by the Virginia Slims SuperSlims ("VSSS") cigarette manufactured by PM; (2) PM's infringement was willful up until receipt of oral opinions in March and May of 1989; and (3) claims 1, 4, and 11 of the Luke patent were not invalid due to an alleged public use. Because the district court did not err in finding claims 1, 4, and 11 obvious over the prior art, we affirm the district court's decision that claims 1, 4, and 11 are invalid. Because that decision moots the remaining issues, we do not address the district court's other invalidity decision or its decisions regarding infringement and willfulness.

BACKGROUND

John Luke, the inventor of the Luke patent, was an employee of British American Tobacco Co., Ltd. ("BAT") and worked in the field of research and design of cigarettes. In the early 1980s, Luke's work was focused on using less tobacco in a cigarette and thereby reducing manufacturing expenses. His work led him to conclude that smaller circumference cigarettes burned more efficiently. Luke made several prototypes of reduced circumference cigarettes and disclosed his discovery to management. B&W, a subsidiary of BAT, became aware of Luke's reduced circumference cigarettes and obtained an exclusive license for them in the United States.

B&W filed a patent application covering Luke's discovery and U.S. Patent No. 4,637,410 (the "'410 patent") issued on January 20, 1987. Shortly thereafter, citing an error in the analysis of a prior art patent to Lephardt, B&W filed a reissue application and also submitted additional references for consideration by the U.S. Patent and Trademark Office. After some amendments, the application was reissued as the Luke patent on March 1, 1988. The Luke patent claims a foreign application priority date of May 24, 1985 and a U.S. priority date of July 22, 1985. The Luke patent contains fifteen claims, of which only claim 1 is independent. The only claims involved in the present litigation are claims 1, 4, and 11. The central limitation in the Luke patent is cigarette circumference, which is limited to 10-19 mm. As a point of reference, traditional cigarettes have circumferences of 23-27 mm.

Around the time that the `410 patent issued, B&W began selling a 17 mm cigarette which was eventually marketed under the name "Capri." The Luke patent discloses an embodiment having a circumference of 17 mm and the parties agree that claims 1, 4, and 11 read on the Capri. Shortly after the `410 patent issued and B&W began marketing Capri, PM began developing a product to compete with the Capri. It took more than two years, however, for PM to place its competing cigarette, the VSSS, on the market.

On May 30, 1989, B&W filed a complaint against PM for infringement of the Luke patent, and subsequently a bench trial was held. In its decision, the district court held that the asserted claims were invalid for obviousness and willfully infringed, but not invalid due to an alleged public use. The district court also held that the Luke patent was not unenforceable due to inequitable conduct. Both parties appeal the decision to this court. They appeal or cross-appeal each holding except for the finding of no inequitable conduct. We have exclusive jurisdiction pursuant to 28 U.S.C. 1295(a)(1) (1994).

DISCUSSION

A. Standard of Review

On appeal from a bench trial, we review a district court's decision for errors of law and clearly erroneous findings of fact. See Fed. R. Civ. P. 52(a); Interspiro USA, Inc. v. Figgie Int'l Inc., 18 F.3d 927, 930, 30 USPQ2d 1070, 1072 (Fed. Cir. 1994).

B. Analysis

1. Claims at Issue

Only claims 1, 4, and 11 of the Luke patent are at issue. Claim 1 is reproduced below:

1. A finished cigarette of commercially acceptable quality and elegant appearance

in the form of an elongated rod of uniform cross-section throughout its length capable of sustained smoulder when lit but not being smoked, said elongated rod consisting of

a cut tobacco filler,

a cigarette paper wrapper, circumscribing said cut tobacco filler a filter in abutment with one end of said cut tobacco filler and

a tipping wrapper maintaining said filter in abutment with said one end of said cut tobacco filler,

the circumference of said elongated rod being within a range of 10 mm to 19 mm, and having a cut tobacco filler packing density within the range of 150 mg per cm³ to 350 mg per cm3 yielding a free burn rate of said rod within a range of 25 to 45 mg min-1,

the aforesaid cigarette utilizing tobacco at greater efficiency than conventional commercially marketed cigarettes.

Luke patent, col. 3, ll. 22-38. Although the claim appears in the Luke patent as one continuous paragraph, without parsing, we have parsed the claim for clarity in our analysis.

Claim 4 reads as follows: "A cigarette as claimed in claim 1, wherein the packing density of said cut tobacco filler is within a range of 200 mg per cm3 to 300 mg per cm3." Id. at col. 4, ll. 1-3. Claim 11 reads as follows: "A cigarette as claimed in claim 1, which provides in excess of about 8 puffs." Id. at col. 4, ll. 26-27. The construction of these claims is not in dispute.

2. Obviousness

The ultimate determination of whether an invention would have been obvious is a legal conclusion based on the totality of the evidence, see Richardson-Vicks Inc. v. Upjohn Co., 122 F.3d 1476, 1483, 44 USPQ2d 1181, 1187 (Fed. Cir. 1997), including underlying factual inquiries such as: (1) the scope and content of the prior art; (2) the level of ordinary skill in the prior art; (3) the differences between the claimed invention and the prior art; and (4) objective evidence of nonobviousness. See Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966); In re Dembiczak, 175 F.3d 994, 998, 50 USPQ2d 1614, 1616 (Fed. Cir. 1999), abrogated on other grounds by In re Gartside, 203 F.3d 1305, 53 USPQ2d 1769 (Fed. Cir. 2000). Accordingly, this ultimate determination of obviousness is reviewed without deference, while any factual findings are reviewed for clear error. See Winner Int'l Royalty Corp. v. Wang, 202 F.3d 1340, 1348, 53 USPQ2d 1580, 1586 (Fed. Cir. 2000). The Supreme Court has stated that a holding is clearly erroneous when, "although there is evidence to support [the holding], the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948). In deciding the legal question of obviousness, we bear in mind that the party asserting invalidity of a patent must prove the disputed facts by clear and convincing evidence. See Georgia Pacific Corp. v. United States Gypsum Co., 195 F.3d 1322, 1330, 52 USPQ2d 1590, 1597 (Fed. Cir. 2000); Newell Cos., Inc. v. Kenney Mfg. Co., 864 F.2d 757, 767, 9 USPQ2d 1417, 1425 (Fed. Cir. 1988).

The statutory standard for the ultimate determination of obviousness provides that a claimed invention is unpatentable if the differences between it and the prior art "are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art." 35 U.S.C. 103 (1994); see also Graham, 383 U.S. at 13. In line with this statutory standard, our case law provides that "[t]he consistent criterion for determination of obviousness is whether the prior art would have suggested to one of ordinary skill in the art that this process should be carried out and would have a reasonable likelihood of success, viewed in the light of the prior art." In re Dow Chem., 837 F.2d 469, 473, 5 USPQ2d 1529, 1531 (Fed. Cir. 1988). Two requirements are contained in this criterion.

The first requirement is that a showing of a suggestion, teaching, or motivation to combine the prior art references is an "essential evidentiary component of an obviousness holding." C.R. Bard, Inc. v. M3 Sys. Inc., 157 F.3d 1340, 1352, 48 USPQ2d 1225, 1232 (Fed. Cir. 1998). This evidence may flow from the prior art references themselves, the knowledge of one of ordinary skill in the art, or, in some cases, from the nature of...