Engel Industries, Inc. v. Lockformer Co.

• Decision Date: 25 September 1996
• Docket Number: No. 95-1182,95-1182
• Citation: 96 F.3d 1398,40 USPQ2d 1161
• Parties: , 40 U.S.P.Q.2d 1161 ENGEL INDUSTRIES, INC., Plaintiff-Appellant, v. The LOCKFORMER COMPANY, Iowa Precision Industries, Inc. and Met-Coil Systems Corp., Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1398

96 F.3d 1398

65 USLW 2273, 40 U.S.P.Q.2d 1161

ENGEL INDUSTRIES, INC., Plaintiff-Appellant, v. The LOCKFORMER COMPANY, Iowa Precision Industries, Inc. and Met-Coil Systems Corp., Defendants-Appellees.

No. 95-1182.

United States Court of Appeals Federal Circuit.

Sept. 25, 1996.

Rehearing Denied Oct. 22, 1996.

Melvin L. Moser, Gorr, Moser, Dell & Loughney, Pittsburgh, Pennsylvania, argued, for plaintiff-appellant. With him on brief was Jerome A. Gross, Jerome A. Gross & Associates, St. Louis, Missouri.

Clarence J. Fleming, Jones, Day, Reavis & Pogue, Chicago, Illinois, argued, for defendants-appellees.

Before RICH, MAYER, and BRYSON, Circuit Judges.

RICH, Circuit Judge.

Engel Industries, Inc. (Engel) appeals from a judgment of the U.S. District Court for the Eastern District of Missouri holding that Engel's Transverse Duct Flange (TDF) system infringes Met-Coil Systems Corporation's (Met-Coil's) U.S. Patent No. 4,466,641 ('641 patent) under the doctrine of equivalents and that Engel must continue to make royalty payments to Met-Coil under the license agreement between Engel and Met-Coil, which the district court held to be not unlawful. Engel Indus. v. The Lockformer Co., No. 86-0212 C(4) (E.D. Mo. filed 15 December 1994). We affirm-in-part and reverse-in-part.

I

BACKGROUND

The '641 patent issued 21 August 1984 and is entitled, "Duct Connecting System." The patent includes both apparatus and method claims directed toward a system for connecting the ends of sheet metal duct sections. Fig. 1 is a plane view of a duct blank used to make a duct section, before it has been roll-formed into a ready-to-assemble shape. When a roll-forming machine folds a blank into a duct section using

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the patented method, it simultaneously creates an integral frame at each duct section end. These frames define flanges that are configured to accept corner pieces, one of which is depicted in Fig. 2. A worker connects two duct sections together by snapping

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four corner pieces into place in each section's frame and bolting the opposing corner pieces of adjacent duct sections together. Fig. 3 depicts a fragmentary perspective view of a duct assembly according to the '641 patent. An enlarged, fragmentary,

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cross-sectional view of a duct joint taken on line 2-2 of Fig. 3 is depicted in Fig. 4.

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The defendants-appellees are Met-Coil, The Lockformer Company (Lockformer), and Iowa Precision Industries, Inc. (IPI). Met-Coil is the present assignee of the '641 patent. Lockformer currently is a wholly-owned subsidiary of Met-Coil and sells three out of every four roll-forming machines sold in the heating, ventilating, and air conditioning (HVAC) industry in the United States. IPI is also currently a wholly-owned subsidiary of Met-Coil and manufactures and sells corner pieces and other items.

Plaintiff-appellant Engel manufactures roll-forming machines for the HVAC industry in competition with Met-Coil. A fragmentary, cross-sectional view of one-half of a duct joint of Engel's TDF system is depicted in Fig. 5. This figure shows the integral flange at the end of a duct section with its associated corner piece in place.

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In September of 1984, shortly after the '641 patent issued, Lockformer, its initial assignee, threatened to sue Engel's customers for infringement. Although Engel asserts that it was not infringing the '641 patent, it nevertheless signed a license agreement dated 30 January 1985. In late 1985 Engel and Met-Coil met to discuss and renegotiate the license agreement based on Met-Coil's alleged failure to prosecute infringing third parties as paragraph 5.1 of the agreement required. At that time Engel also challenged the validity of the '641 patent based on some European prior art. Met-Coil ignored Engel's validity challenge, refused to renegotiate a lesser royalty for Engel, and continued to require royalty payments under the license agreement.

On 28 January 1986, Engel filed this lawsuit seeking a declaratory judgment of invalidity and noninfringement of the '641 patent. Engel also asked that Met-Coil return the royalties collected by Met-Coil under the agreement, arguing that it was void because the '641 patent was invalid or, in the alternative, that Met-Coil had breached paragraph 5.1 of the agreement by not fulfilling its duty to prosecute other allegedly infringing parties or paragraph 5.2 for failure to renegotiate the terms of the license agreement. Engel also sought damages from Met-Coil based upon various alleged antitrust violations. Met-Coil denied Engel's claims and counterclaimed, seeking a declaratory judgment that the '641 patent was not invalid. Met-Coil also requested a finding that, absent the license agreement, Engel would be infringing the '641 patent and that royalty payments were to continue according to the After a three-day bench trial beginning 30 May 1989, Judge Cahill issued a Memorandum and Order on 13 July 1990 (the 1990 Order). Judge Cahill held the '641 patent "invalid for failure to comply with the best mode rule and for inequitable conduct by defendants for concealing the best mode." He also held, inter alia, that the license agreement was invalid based upon the invalidity of the patent and the inequitable conduct. The district court ordered Met-Coil to repay Engel $227,935 in royalties, paid between the filing of the complaint and April, 1989, and held that Engel was not obligated to make future royalty payments.

terms of the license agreement. Engel denied Met-Coil's infringement claims and asserted a patent misuse defense.

Met-Coil, Lockformer, and IPI (collectively Met-Coil) appealed the 1990 Order to this court, Engel Indus. v. The Lockformer Co., 946 F.2d 1528, 20 USPQ2d 1300 (Fed.Cir.1991) [hereinafter Engel I ]. In Engel I, another panel of this court reversed and remanded, holding that the '641 patent was not invalid for failure to comply with the best mode requirement and that no inequitable conduct had occurred. Neither the 1990 Order nor the Engel I opinion addresses whether Engel's TDF system infringes the '641 patent.

Still without addressing infringement, the district court, on remand, entered a series of orders that culminated in a 15 April 1993 judgment in favor of Met-Coil (the 1993 Judgment). Engel subsequently attempted to get a ruling on infringement by filing a motion to alter or amend the 1993 Judgment and for trial before a magistrate judge of undetermined issues. When the district court denied its motion, Engel again appealed to this court, Engel Indus. v. The Lockformer Co., 22 F.3d 1105 (Table), No. 93-1418, 1994 WL 89036 (Fed.Cir.18 March 1994) [hereinafter Engel II ]. In a non-precedential opinion, the Engel I panel held in Engel II that the district court had erred as a matter of law in refusing to rule on the question of infringement and in failing to make any findings of fact or conclusions of law on the issues that are the subject of the present appeal. The Engel II panel vacated the district court's order denying Engel's motion to alter or amend the 1993 Judgment, and remanded for the district court to adjudicate issues of infringement, royalties, and breach of the license agreement, and for making findings and conclusions. ¹

The district court subsequently entered its 21 July 1994 findings and conclusions on infringement. It held that Engel's TDF system infringes the '641 patent only under the doctrine of equivalents. Then, with the parties' consent, the issues of breach and validity of the license agreement were tried to a magistrate judge, who issued supplemental findings and conclusions on 15 December 1994. The magistrate judge entered a judgment that the license agreement was lawful and that Met-Coil had not breached it.

Engel now seeks review of both the holding that its TDF system infringes the '641 patent under the doctrine of equivalents and the holding that the license agreement is not unlawful. Met-Coil asserts that Engel also literally infringes its '641 patent. We first address whether Engel's TDF system infringes any of independent claims 1, 7, 14, or 20 of the '641 patent, either literally or under the doctrine of equivalents. The parties agree that claim 13, the only other independent claim, is not at issue. Dependent claims 2-6, 8-12, 15-19, and 21-25 are of no importance to this appeal since, as discussed below, it is in independent claims 1, 7, 14, and 20 that the significant limitations appear. See Atlanta Motoring Accessories, Inc. v. Saratoga Technologies, Inc., 33 F.3d 1362, 1364, 31 USPQ2d 1929, 1930 (Fed.Cir.1994). Then, we consider the license agreement. We note that the parties currently have a related case pending in Iowa that may be directly affected by our decision in the instant appeal.

II INFRINGEMENT

Analysis of patent infringement involves two steps: (1) claim construction to

determine what the claims cover, i.e., their scope, followed by (2) determination of whether the properly construed claims encompass the accused structure. On appeal after a bench trial, we review step (1) de novo and step (2) for clear error. See Markman v. Westview Instruments, Inc., 52 F.3d 967, 976, 34 USPQ2d 1321, 1326 (Fed.Cir.) (in banc), aff'd, --- U.S. ----, 116 S.Ct. 1384, 134 L.Ed.2d 577, 38 USPQ2d 1461 (1996).

A. Claim Construction

Claims 1 and 14 of the '641 patent are apparatus claims. Claim 1 provides as follows (emphasis ours, bracketed material added, including reference numerals from the above figures):

1. In a system for connecting the ends [18, 20] of sheet metal ducts wherein a frame [at least the combination of 22 and 24] is provided for each duct end [18, 20], corner connectors defining...