Ecolab, Inc. v. Paraclipse, Inc.

• Decision Date: 03 April 2002
• Docket Number: No. 01-1205.,No. 01-1204.,01-1204.,01-1205.
• Parties: ECOLAB INC., Plaintiff-Appellant, v. PARACLIPSE, INC. (doing business as Paraclipse Automated Insect Control Division), Defendant-Cross Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

285 F.3d 1362

ECOLAB INC., Plaintiff-Appellant, v. PARACLIPSE, INC. (doing business as Paraclipse Automated Insect Control Division), Defendant-Cross Appellant.

No. 01-1204.

No. 01-1205.

United States Court of Appeals, Federal Circuit.

April 3, 2002.

Rehearing and Rehearing En Banc Denied May 9, 2002.

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J. Derek Vandenburgh, Merchant & Gould P.C., of Minneapolis, MN, argued for plaintiff-appellant. With him on the brief were Douglas J. Williams and Jonelle R. Witt. Of counsel on the brief was Andrew D. Sorensen, Ecolab Inc., of St. Paul, MN.

Keith V. Rockey, Rockey, Milnamow & Katz, Ltd., of Chicago, IL, argued for defendant-cross appellant. With him on the brief was Kathleen A. Lyons. Of counsel on the brief was James J. Hill, Emrich & Dithmar, of Chicago, IL.

Before CLEVENGER, GAJARSA, and DYK, Circuit Judges.

DECISION

DYK, Circuit Judge.

Ecolab Inc. ("Ecolab") brought suit against Paraclipse, Inc. ("Paraclipse") in the United States District Court for the District of Nebraska for infringement of its U.S. Patent No. 5,365,690 ("the '690 patent"). Ecolab appeals the decision of the district court upholding a jury verdict of noninfringement and denying Ecolab's motion for judgment as a matter of law or for a new trial. Ecolab Inc. v. Paraclipse, Inc., No. 8:97CV304 (D.Neb. Dec. 22, 2000). Paraclipse cross-appeals the district court's decision barring Paraclipse from challenging the validity of the '690 patent.

We hold that the district court correctly upheld the jury verdict of noninfringement as to claim 1 of the '690 patent. But because we find that the district court gave an erroneous and prejudicial jury instruction as to claim 16, we vacate the verdict of noninfringement as to claim 16 and remand for a new trial. We further hold that in the new trial, Paraclipse is entitled to challenge the validity of the '690 patent, because the district court erred in holding that an earlier settlement agreement foreclosed Paraclipse's invalidity defense. We therefore affirm-in-part, reverse-in-part, and remand for a new trial.

I

The '690 patent relates to lighted insect traps used to trap flies in restaurants, hospitals, and other sensitive areas where traditional means of insect control are undesirable. Ecolab sought to develop an insect trap that would be effective in controlling insects in customer-sensitive areas, but that would also be attractive and unobtrusive so customers would not normally recognize the products as insect traps. Recognizing that prior art traps "neither display [insect] attractant light to the maximum advantage nor use an improved trap insect entry geometry," '690 patent, col. 1, ll. 59-61, Ecolab developed the invention recited in the '690 patent known as the Stealth trap. The figures of the patent are illustrative of the claimed invention and are reproduced below.

NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Figure 1 shows a housing having side walls, a bottom wall, and an upwardly facing opening for insect entry. '690 patent, col. 8, ll. 5-19. A light source is positioned within the housing such that the light source cannot be directly viewed when the trap is mounted at or above eye level. Id., col. 8, ll. 21-28. The trap creates a display of insect attractant light on the vertical wall above the trap on which the trap is mounted. Id., col. 2, ll. 34-40. The invention includes at least one "reflecting surface" that projects reflected light onto the wall to enhance or enlarge the "footprint" of light on the wall surface. Id., col. 8, ll. 34-44. Flying insects are attracted to the footprint of light on the wall above the trap and enter the trap by moving downward through the upwardly-facing opening, where they are immobilized on an adhesive layer contained within the trap. Id.

Independent claims 1 and 16 of the '690 patent are at issue on appeal. Claim 1 recites:

1. A flying insect trap that uses a display of insect attractant light reflected and radiated onto a vertical mounting surface, said trap comprising:

(a) a means for mounting a flying insect trap on a vertical mounting surface;

(b) a source of insect attractant light; and

(c) a housing enclosing the source, said housing comprising:

(i) an internal reflecting surface of the housing, positioned with respect to the horizontal such that light from the source of the insect attracting light is directed onto the vertical mounting surface forming a diffused light pattern; and

(ii) an insect immobilization surface; wherein the housing comprises an upwardly facing opening for insect entry and the insect attractant light source is placed in the housing below an edge of the upwardly facing opening.

Col. 8, l. 53 — col. 9, l. 2 (emphasis added).

Claim 16 recites:

16. A flying insect trap using reflected and radiated light as an insect attractant, which trap comprises a vertical, planar surface, a housing containing a means to mount the housing on the vertical, planar surface, an insect immobilization surface and a source of insect attractant light wherein the housing is configured such that when mounted on the vertical, planar surface, the source cannot be directly viewed and the housing contains a surface at an angle to the horizontal, planar surface of less than 80° which reflects light from the source onto the vertical, planar surface, and the trap has an upwardly facing opening.

Col. 10, ll. 9-20 (emphasis added).

Paraclipse manufactures and sells flying insect traps that compete with Ecolab's Stealth® traps. This is the second time Ecolab has sued Paraclipse for infringement of the '690 patent. Ecolab first sued Paraclipse in 1994, alleging that Paraclipse's Insect Inn II trap infringed the '690 patent. After two years of litigation and just prior to trial, that case was settled by entry of a consent judgment that provided that: "This Court finds and concludes, and Paraclipse agrees, that the '690 patent is a valid patent," that "Paraclipse has infringed the '690 patent by making, using and selling its `Insect Inn II' product," and that "the invention of the '690 patent is a pioneering invention." Ecolab Inc. v. Paraclipse, Inc., No. 8:94CV601 (D.Neb. Oct. 17, 1996) (order entering consent judgment). The consent judgment required Paraclipse to discontinue sale of the Insect Inn II trap. Id.

Shortly thereafter, Paraclipse introduced the Insect Inn IV trap, the device at issue here. The Insect Inn IV trap has a housing that is closed on the sides and the bottom but open at the top, a UV light bulb within the housing that shines an insect attractant light onto the wall above the trap, and a cartridge having an adhesive surface for trapping flies. The Insect Inn IV trap also includes a shiny black reflector plate immediately below the light bulb, and a Mylar strip located on the vertical back wall of the housing. The insect Inn IV trap differs from the Insect Inn II trap in that (1) it lacks a reflector located between the bulb and the outer wall of the housing, (2) the inside of the outer walls of the housing are black in color, and (3) it has two elements that were not present in the Insect Inn II trap: a shiny black reflector plate immediately below the light bulb and a Mylar strip on the vertical back wall of the housing. Ecolab sued Paraclipse a second time, alleging that the Insect Inn IV trap infringed the '690 patent, U.S. Patent No. 5,507,017 (the "'017 patent"), and U.S. Design Patent No. D357,762.¹

The district court held a Markman hearing in November 1998. On August 18, 1999, the district court issued its Markman Order construing the disputed terms "internal reflecting surface"² and "insect attractant light." Ecolab Inc. v. Paraclipse, Inc., No. 8:97CV304 (D.Neb. Aug. 18 1999) (order on Markman hearing) ("Markman Order"). The district court held that: (1) the term "internal reflecting surface" does not cover a "black matte layer or surface inside the housing;" (2) the term "internal reflecting surface" does not cover a "vertical reflective surface which functions primarily to direct light outward into the room rather than upward on the wall above the trap;" and (3) the "limitation [of dependent claim 25] regarding five foot-candles of reflected light" should not be read into the other claims. Markman Order at 21. The court did not limit the term "internal reflecting surface" to a particular location within the housing.

Before trial, Ecolab filed a motion in limine to preclude Paraclipse from challenging the validity of the '690 patent at trial, arguing that Paraclipse waived the right to assert an invalidity defense by entering into the consent judgment that provided that: "This Court finds and concludes, and Paraclipse agrees, that the '690 patent is a valid patent." Ecolab Inc. v. Paraclipse, Inc., No. 8:94CV601 (D.Neb. Oct. 17, 1996) (order entering consent judgment). The district court granted the motion, and barred Paraclipse from introducing evidence challenging the validity of the '690 patent. Ecolab, No. 8:97CV304 (D.Neb. Dec. 7, 2000) (order granting motion in limine). The district court also barred Paraclipse from defending on the ground that it was practicing the prior art of expired U.S. Patent No. 4,876,822 ("the White patent"). Id.

The case was tried to a jury in December 2000. With respect to claim interpretation, the district court gave the jury Instruction No. 11:

The terms "interior reflective surface" and "internal reflecting surface," used in the claims of the '690 patent, do not include a black matte surface inside the housing, that is, a black matte on the inner wall of the housing. "Direct light," as described in the patents, means light radiated directly from the source of the light onto the wall above the unit. The term "reflected light," as used in the patent claims, means the light from the source which bounces off, i.e., is reflected off, a reflecting surface on the inside wall of the housing cover....