Clearvalue, Inc. v. Pearl River Polymers, Inc.

• Citation: 668 F.3d 1340,101 U.S.P.Q.2d 1773
• Decision Date: 17 February 2012
• Docket Number: 2011–1100.,Nos. 2011–1078,s. 2011–1078
• Parties: CLEARVALUE, INC. and Richard Alan Haase, Plaintiffs–Cross Appellants, v. PEARL RIVER POLYMERS, INC., Polychemie, Inc., SNF, Inc., Polydyne, Inc., and SNF Holding Company, Defendants–Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

101 U.S.P.Q.2d 1773

668 F.3d 1340

CLEARVALUE, INC. and Richard Alan Haase, Plaintiffs–Cross Appellants,

v.PEARL RIVER POLYMERS, INC., Polychemie, Inc., SNF, Inc., Polydyne, Inc., and SNF Holding Company, Defendants–Appellants.

Nos. 2011–1078

2011–1100.

United States Court of Appeals, Federal Circuit.

Feb. 17, 2012.

Arnold A. Vickery, Vickery, Waldner & Mallia, LLP, of Houston, TX, argued for plaintiffs-cross appellants. With him on the brief was Earl L. Vickery, of Austin, TX.

John T. Gallagher, Dickstein Shapiro, LLP, of New York, NY, argued for defendants-appellants. With him on the brief were Gary M. Hoffman and Robert L. Kinder, of Washington, DC. Of counsel on the brief were Andy Tindel, Provost Umphrey Law Firm, LLP, of Tyler, TX; and Howard L. Close and R. Russell Hollenbeck, Wright & Close, LLP, of Houston, TX.

Before PROST, SCHALL, and MOORE, Circuit Judges.

MOORE, Circuit Judge.

ClearValue, Inc. and Richard Alan Haase (collectively, ClearValue) accused Pearl River Polymers, Inc., et al. (collectively, Pearl River) of indirectly infringing U.S. patent no. 6,120,690 ('690 patent). After a jury found that the '690 patent was valid and indirectly infringed, the district court denied Pearl River's motions for judgment as a matter of law (JMOL) of invalidity and noninfringement. J.A. 5–37. Because the jury's verdict that the '690 patent was not invalid under 35 U.S.C. § 102 was not supported by substantial evidence, we reverse the denial of the motion for JMOL of invalidity.

Cross–Appellant ClearValue appeals the district court's grant of JMOL that Pearl River did not misappropriate ClearValue's Trade Secret # 1. Because we agree with the district court that the jury verdict was not supported by substantial evidence, we affirm.

Background

The '690 patent is directed to a process for clarifying low alkalinity water using a blend of a high molecular weight quaternized polymer (e.g., DADMAC) and an aluminum polymer. '690 patent col. 16 ll. 15–32. Claim 1, the only claim at issue on appeal, reads:

A process for clarification of water of raw alkalinity less than or equal to 50 ppm by chemical treatment, said process comprising:

adding to the water and, prior to or after adding to the water, blending at least one aluminum polymer with a high molecular weight quaternized ammonium polymer in an amount sufficient to form a flocculated suspension in the water and to remove turbidity from the water, said high molecular weight quaternized ammonium polymer comprising at least an effective amount of

high molecular weight di-allyl di-methyl ammonium chloride (DADMAC) having a molecular weight of at least approximately 1,000,000 to approximately 3,000,000 and

said aluminum polymer including at least an effective amount of poly-aluminum hydroxychloride [ACH] of a basicity equal to or greater than 50%.

'690 patent cl.1 (emphasis added).

ClearValue alleged that Pearl River indirectly infringed claim 1 by selling high molecular weight DADMAC polymers, which customers allegedly used in combination with aluminum polymers to clarify water with alkalinity below 50 ppm. A jury found Pearl River liable for both induced and contributory infringement of claim 1, and the district court denied Pearl River's JMOL of noninfringement. Pearl River also filed a motion for JMOL of invalidity, in which it argued that the '690 patent was anticipated by U.S. patent no. 4,800,039 (Hassick). The district court denied JMOL based on ClearValue's expert testimony that Hassick “teaches away” from claim 1, which the district court held was “more than sufficient to support the jury's finding of no anticipation or obviousness.” J.A. 20–21.

ClearValue also alleged that Pearl River misappropriated its trade secrets, including Trade Secret # 1, which covers a clarification process similar to the one in claim 1. ClearValue claims that it confidentially disclosed this trade secret to Pearl River pursuant to a business relationship between the companies, and that Pearl River subsequently misappropriated the trade secret by using it to further its own water clarification business. ClearValue argued that it kept this process secret until the '690 patent issued. The jury found that Pearl River had misappropriated ClearValue's trade secrets. The district court, however, found no evidence to support the jury's determination that Trade Secret # 1 was actually a trade secret. In particular, the district court held that Hassick disclosed every element of Trade Secret # 1 before any alleged misappropriation by Pearl River. J.A. 11. The court thus granted Pearl River's motion for JMOL of no trade secret misappropriation.

Pearl River now appeals the district court's denial of its motions for JMOL of invalidity and noninfringement. ClearValue cross-appeals the grant of JMOL of no trade secret misappropriation. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

Discussion

We review the grant or denial of a motion for JMOL under the law of the regional circuit. Summit Tech., Inc. v. Nidek Co., 363 F.3d 1219, 1223 (Fed.Cir.2004). The Fifth Circuit reviews the grant or denial of JMOL de novo. Med. Care Am., Inc. v. Nat'l Union Fire Ins. Co., 341 F.3d 415, 420 (5th Cir.2003). “If there is substantial evidence opposed to [JMOL] ... [it] should be denied.” Id. (citation omitted). We have interpreted the Fifth Circuit's standard to mean that the jury's determination must be supported by substantial evidence. ACCO Brands, Inc. v. ABA Locks Mfrs. Co., 501 F.3d 1307, 1312 (Fed.Cir.2007). Anticipation under 35 U.S.C. § 102 is a question of fact, which we review for substantial evidence. z4 Techs., Inc. v. Microsoft Corp., 507 F.3d 1340, 1347 (Fed.Cir.2007).

I. Invalidity

As a preliminary matter, ClearValue argues that Pearl River waived its invalidity defenses on appeal by including them in its motion under Fed.R.Civ.P. 50(b) but not in its Fed.R.Civ.P. 50(a) motion. We apply the law of the regional circuit to decide waiver of an issue not raised in a Rule 50(a) motion. Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1203 (Fed.Cir.2010). In the Fifth Circuit, when a party fails to make a Rule 50(a) motion, but brings a Rule 50(b) motion, the nonmoving party may only raise waiver on appeal if it also did so in opposing the Rule 50(b) motion. Arsement v. Spinnaker Exploration Co., 400 F.3d 238, 247 (5th Cir.2005). ClearValue's opposition to Pearl River's Rule 50(b) motion did not raise waiver. J.A. 6333–38. As a result, we hold that ClearValue cannot argue waiver on appeal and that Pearl River is not barred from presenting its invalidity arguments.

The district court denied Pearl River's motion for JMOL of invalidity based on anticipation and obviousness because it concluded that Hassick “ ‘teaches away’ from the true inventiveness of the '690 patent.” J.A. 20. The court relied on testimony by ClearValue's expert that it would not have been obvious to one of ordinary skill to clarify water using ACH with high molecular weight DADMAC because Hassick shows this combination does not work well. Id. The district court held that this was sufficient evidence to support the jury's finding of no anticipation or obviousness based on Hassick. Id. at 20–21. Although this alleged teaching away would be relevant to an obviousness analysis, “whether a reference ‘teaches away’ from [an] invention is inapplicable to an anticipation analysis.” Celeritas Techs., Ltd. v. Rockwell Int'l Corp., 150 F.3d 1354, 1361 (Fed.Cir.1998) (citation omitted). The district court thus erred by holding that this testimony was substantial evidence supporting the jury's verdict of no anticipation.

To anticipate a patent claim under 35 U.S.C. § 102, “a reference must describe ... each and every claim limitation and enable one of skill in the art to practice an embodiment of the claimed invention without undue experimentation.” Am. Calcar, Inc. v. Am. Honda Motor Co., 651 F.3d 1318, 1341 (Fed.Cir.2011) (citing In re Gleave, 560 F.3d 1331, 1334 (Fed.Cir.2009)). On appeal, Pearl River argues that the jury's verdict was not supported by substantial evidence because Hassick teaches each and every limitation of claim 1 of the '690 patent.

Claim 1 is directed to “A process for clarification of water of raw alkalinity less than or equal to 50 ppm.” '690 patent cl. 1 (emphasis added). ClearValue concedes that Hassick teaches every limitation of claim 1.¹ ClearValue argues, however, that substantial evidence supported the jury's verdict of no anticipation because Hassick's disclosure of clarifying water with alkalinity of 150 ppm or less is too broad to anticipate the 50 ppm limitation of claim 1. Cross–Appellant's Br. 36. In support of its argument, ClearValue cites our opinion in Atofina v. Great Lakes Chem. Corp., 441 F.3d 991 (Fed.Cir.2006).

ClearValue's reliance on Atofina is misplaced. The patent at issue in Atofina claims a method of synthesizing difluoromethane at a temperature between 330–450 °C. U.S. patent no. 5,900,514 col. 3 ll. 61–62 ('514 patent); see also Atofina, 441 F.3d at 993. The patent states that “only a narrow temperature range enables” the process to operate as claimed, and that problems occur when operating the reaction either below 330 °C or above 400 °C. '514 patent col. 3 ll. 23–29. For these reasons, the patent in Atofina taught that the claimed reaction “must be carried out at a temperature of between 330° C and 450° C,” and more preferably at a temperature between 350–400 °C. Id. col. 3 ll. 61–65. During the prosecution of the Atofina patent, Atofina described this temperature range as “critical.” Atofina, J.A. 1304, 1312. Atofina also noted during prosecution that the patent's comparative example 1 “shows that a temperature of 300°C does not allow” the synthesis reaction to operate as claimed. Atofina, J.A. 1306, 1311–12. By contrast, the prior art in Atofina disclosed a broad temperature range of 100–500 °C. Atofina, 441 F.3d at 999.

In Atofina, we held that the ...