Glass Equipment Development, Inc. v. Besten, Inc., s. 96-1467

• Decision Date: 05 April 1999
• Docket Number: Nos. 96-1467,96-1481,s. 96-1467
• Citation: 174 F.3d 1337,50 USPQ2d 1300
• Parties: GLASS EQUIPMENT DEVELOPMENT, INCORPORATED, Plaintiff-Appellant, v. BESTEN, INC., Defendant-Cross Appellant, and Simonton Windows Company, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1337

174 F.3d 1337

50 U.S.P.Q.2d 1300

GLASS EQUIPMENT DEVELOPMENT, INCORPORATED, Plaintiff-Appellant, v. BESTEN, INC., Defendant-Cross Appellant and Simonton Windows Company, Defendant-Appellee.

Nos. 96-1467, 96-1481.

United States Court of Appeals Federal Circuit.

April 5, 1999.

Rehearing and Suggestion for Rehearing

En Banc Denied May 13, 1999.

Thomas H. Shunk, Baker & Hostetler, of Cleveland, Ohio, argued for plaintiff-appellant. With him on the brief was Wade A. Mitchell. Of counsel on the brief was Linn J. Raney, Watts, Hoffmann, Fisher & Heinke, of Cleveland, Ohio.

Michael W. Vary, Jones, Day, Reavis & Pogue, of Cleveland, Ohio, argued for defendant-cross appellant. With him on the brief was Cheryl L. Farine. Of counsel on the brief were Gregory A. Morgan and J. Miles Morgan, Young, Morgan & Cann, of Clarksburg, West Virginia.

Before RICH, NEWMAN, and CLEVENGER, Circuit Judges.

RICH, Circuit Judge.

Glass Equipment Development, Inc. (GED) appeals from that portion of the June 27, 1996 decision of the United States District Court for the Northern District of West Virginia granting a summary judgment that Besten, Inc. (Besten) is not liable for inducing infringement of GED's method patent No. 4,628,582 (the '582 method patent) by Simonton Windows Company (Simonton) because Simonton had an implied license to use the method. Besten cross-appeals from that portion of the judgment dismissing its antitrust counterclaim with prejudice. We reverse the grant of summary judgment that Besten had no liability for inducement to infringe because Simonton had an implied license, since we hold that Simonton had no implied license under the patent in suit. We affirm the summary judgment dismissal of Besten's antitrust counterclaim because, assuming that Besten's relevant allegations are true, GED cannot have any antitrust liability, and we remand the case.

BACKGROUND

This case involves the fabrication of "spacer frames" that are used in the manufacture of thermally insulating glass windows. Spacer frames are generally composed of hollow aluminum bars that are joined at their ends with "corner keys" and both are coated with sealant/adhesive so that, when the spacer frame is sandwiched between two sheets of glass, an air- and moisture-tight seal is formed between the frame and the glass and an insulating space is formed between the glass sheets.

GED is the assignee of U.S. Patent No. 4,530,195 (the '195 apparatus patent), which claims spacer frame assemblies. Hinged corner keys that lock in position when completely folded (folding, locking corner keys) are elements of the apparatus patent combination claims but are not claimed independently. GED licensed Allmetal, Inc. (Allmetal) under this patent to manufacture various spacer frame components, including folding, locking corner keys.

GED is also the assignee of the '582 method patent in suit, which claims methods for making spacer frame assemblies Simonton, a manufacturer of insulated glass windows, bought folding, locking corner keys from Allmetal for a period of time before 1988 and used the keys to make spacer frames by a method that did not infringe the '582 method patent. In 1988, Simonton purchased a linear extruding machine from Besten and began using it to make spacer frames, still using folding, locking corner keys purchased from Allmetal. GED is a competitor of Besten in the sale of linear extruding machines. In 1993, GED brought suit against Simonton, alleging infringement of several of the method patent claims, and against Besten for allegedly actively inducing Simonton to infringe. See 35 U.S.C. § 271(b).

using a linear extruding machine (herein referred to as the claimed linear method). The method patent's independent claim calls for, inter alia, linearly connecting four spacer frame segments together using folding, locking corner keys in the unfolded position, moving the aligned frame segments through a linear extruding machine which applies sealant/adhesive to the frame segments and corner keys, pivoting the coated frame segments about the axes of the corner key hinges so that the corner keys lock in place, and joining the free ends together to form a rectangular frame. See '582 patent, col. 12, ll. 22-57.

Simonton settled with GED in November 1994, admitting infringement of the '582 method patent. Consequently, Simonton is not a party to this appeal.

Besten argued that GED was estopped from asserting that Simonton infringed the method patent and therefore Besten could not be liable for inducing Simonton to infringe. Besten's estoppel argument was based on a theory that Simonton had an implied license to practice the claimed linear method. This theory was in turn based on Besten's assertion that there were no uses of the corner keys Simonton bought from GED's licensee Allmetal that did not infringe the method patent.

Besten also counterclaimed that GED's lawsuit was part of an attempt to monopolize the market for spacer frame linear extruding machines, as to which GED and Besten are competitors, in violation of section 2 of the Sherman Act and the corresponding West Virginia statute.

Besten moved for summary judgment on its implied license defense. In response, GED introduced evidence of two noninfringing spacer frame manufacturing methods that can utilize folding, locking corner keys--the "handgun" and "cartwheel" methods (the "handgun" method involves manual spraying of sealant/adhesive on an assembled spacer frame and the "cartwheel" method involves passing an assembled spacer frame through a sealant/adhesive extruding machine so that one frame segment is coated, "cartwheeling" the frame so that another frame segment is coated on the next pass through the extruding machine, and repeating the process so that all frame segments are coated).

In an unpublished opinion, the district court stated that the '195 apparatus and '582 method patents ought to be "read together" to establish that the intended purpose of the corner keys produced by Allmetal under the '195 apparatus patent license was to manufacture insulating windows via the claimed linear method. This was error. The court then stated that resolution of Besten's summary judgment motion depended on whether there were "commercially viable" (i.e., competitive) noninfringing uses for the folding, locking corner keys sold by Allmetal.

In its later, published opinion, Glass Equipment Development, Inc. v. Simonton Windows Co., 929 F.Supp. 227, 229 (N.D.W.Va.1996) (GED I ), the court found that the folding, locking corner keys sold by Allmetal had indeed been used to manufacture spacer frames via the noninfringing cartwheel method by Louisiana Pacific Company from 1981-83 and by Simonton until 1988, but that there was no noninfringing use of the corner keys as of September 1995. The district court also found that these companies had changed from the cartwheel method to the patented linear Based on its summary judgment in favor of Besten on the implied license defense, the court found that Besten had the right to sell linear extruding machines to companies that wished to purchase folding, locking corner keys from Allmetal and thereby obtain an implied license to practice the patented linear method. The court concluded that Besten had therefore suffered no antitrust damages and dismissed Besten's antitrust counterclaim with prejudice.

method because the latter was the most profitable manufacturing method. The court stated that the noninfringing methods of using the corner keys could not support the development and continuation of an ongoing business, because any business using a noninfringing method would be undersold by another business using the patented linear method. Based on these findings, the court held that (1) there were no current "commercially viable" noninfringing uses of the folding, locking corner keys sold by Allmetal; (2) Simonton therefore had an implied license through purchase and use of the corner keys from GED's licensee Allmetal to use the patented linear method, and could not be held liable for infringement of that patent; and (3) because Simonton was not an infringer, Besten could not be held liable for inducing Simonton to infringe. Consequently, the court granted summary judgment in favor of Besten on its implied license defense. See GED I, 929 F.Supp. at 229-30.

GED appeals the district court's grant of summary judgment in favor of Besten concerning its inducement of infringement allegation, and Besten appeals the court's dismissal of its antitrust counterclaim.

ANALYSIS

We review a district court's grant of summary judgment de novo. See, e.g., Gasser Chair Co., Inc. v. Infanti Chair Mfg. Corp., 60 F.3d 770, 773, 34 USPQ2d 1822, 1824 (Fed.Cir.1995). Summary judgment is not appropriate unless there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Where, as here, the parties do not contest the relevant underlying facts, our review of the court's decision is plenary. Carborundum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d 872, 877-78, 37 USPQ2d 1169, 1172 (Fed.Cir.1995) (citing Newell Cos. v. Kenney Mfg. Co., 864 F.2d 757, 765, 9 USPQ2d 1417, 1424 (Fed.Cir.1988)). We will now consider the implied license issue followed by the antitrust counterclaim.

I. The Implied License Defense

The existence of an implied license is a question of law which we review de novo. ¹ Met-Coil Sys. Corp. v. Korners Unlimited, Inc., 803 F.2d 684, 687, 231 USPQ 474, 476 (Fed.Cir.1986). Besten correctly asserts that if Simonton did have an implied license under the '582 patent to assemble spacer frames by the methods claimed therein, GED would be estopped from maintaining a suit against Simonton for infringement and Besten could not be liable for inducing Simonton to infringe. See DeForest...