Gustafson, Inc. v. Intersystems Indus. Products, Inc.

• Decision Date: 22 February 1990
• Docket Number: 89-1410,Nos. 89-1383,s. 89-1383
• Citation: 13 USPQ2d 1972,897 F.2d 508
• Parties: , 13 U.S.P.Q.2d 1972 GUSTAFSON, INC., Plaintiff-Appellant, v. INTERSYSTEMS INDUSTRIAL PRODUCTS, INC. and Hugo Wenshau, Defendants/Cross-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

Page 508

897 F.2d 508

58 USLW 2523, 13 U.S.P.Q.2d 1972

GUSTAFSON, INC., Plaintiff-Appellant, v. INTERSYSTEMS INDUSTRIAL PRODUCTS, INC. and Hugo Wenshau,

Defendants/Cross-Appellants.

Nos. 89-1383, 89-1410.

United States Court of Appeals, Federal Circuit.

Feb. 22, 1990.

Gordon T. Arnold, of Richards, Harris, Medlock & Andrews, Dallas, Tex., argued for plaintiff-appellant. With him on the brief was V. Bryan Medlock, Jr.

Jerry R. Selinger, of Baker, Mills & Glast, Dallas, Tex., argued for defendants/cross-appellants. Of counsel were Martha E. Waters and Tori L. Smith, of Baker, Mills & Glast, and Bernard Malina, of Malina & Wolson, New York City.

Before MARKEY, Chief Judge, and BISSELL ^* and ARCHER, Circuit Judges.

MARKEY, Chief Judge.

Appeal from a judgment of the United States District Court for the Northern District of Texas, No. CA 3-83-1330-T. The district court determined that Gustafson, Inc.'s (Gustafson's) United States Patent Nos. 3,383,924 ('924) and 4,443,587 ('587) were not invalid and were willfully infringed by Intersystems Industrial Products,

Inc. (Intersystems). The court awarded no damages to Gustafson, permanently enjoined Intersystems from "designing, manufacturing, or selling either its Model PTI sampler or Model PDP sampler," and awarded Gustafson attorney fees of $113,220.38. Gustafson appeals from the denial of damages. Intersystems cross-appeals from the injunction and the award of attorney fees. We reverse the award of attorney fees and affirm in all other respects.

BACKGROUND

The '924 and '587 patents relate to devices that remove samples from pressurized pipes. On August 4, 1983 Gustafson sued Intersystems, alleging the latter's model PS sampler infringed claims 1-11 of the '924 patent. ¹ On February 28, 1984, Gustafson's '587 patent issued and on June 7, 1984 Gustafson amended its complaint to assert that Intersystems's models PTI and PDP samplers infringed claims 1, 7, 15 and 16 of that patent.

The district court made these findings and conclusions: (1) Intersystems's model PS sampler infringed the '924 patent; ² (2) Intersystems's models PDP and PTI samplers infringed the '587 patent under the doctrine of equivalents; (3) The inventions defined in the asserted claims of the '924 and '587 patents would not have been obvious, 35 U.S.C. Sec. 103 (1982), and were not anticipated, 35 U.S.C. Sec. 102 (1982); (4) If Gustafson's evidence were admissible, its lost profits would be $163,597; and (5) Gustafson "cannot recover damages because the Court cannot consider [Gustafson's] evidence of lost profits."

The district court having found that Intersystems had willfully infringed and that this is an exceptional case, awarded Gustafson attorney fees. The relative findings read in their entirety:

14. Defendant Intersystems was aware of the existence of Plaintiff's '924 patent as of the date Plaintiff's Original Complaint was filed.

15. Defendant Intersystems was aware of the existence of Plaintiff's '587 patent as of the date Plaintiff's First Supplemental Complaint was Filed.

16. Defendant Intersystems took no action to ascertain whether the samplers it was producing would infringe on Plaintiff's samplers patents.

17. Defendant designed, engineered and manufactured its Model PS sampler to compete with the Model R Gustafson sampler.

18. This is an exceptional case pursuant to 35 U.S.C. Sec. 285.

ISSUE

Whether the district court clearly erred in finding Intersystems's infringement willful.

OPINION

Introduction

The parties attempt to retry their cases on appeal. Except for the arguments on willfulness, none even remotely approaches a showing of reversible error. Hence a detailed discussion of those arguments would serve no useful purpose and would unduly lengthen this opinion.

It is sufficient to state that we find no reversible error in the district court's: (1) finding that Intersystems's model PTI and model PDP samplers infringed claims 1, 7, 15, and 16 of the '587 patent under the doctrine of equivalents; (2) holding that those claims had not been shown to be invalid; (3) excluding plaintiff's exhibit 29 as inadmissible hearsay, Florida Canal Indus., Inc. v. Rambo, 537 F.2d 200, 202 (5th Cir.1976) (report of third-party statement inadmissible); (4) awarding no damages to Gustafson because none were proven, see Lindemann Maschinenfabrik GmbH v. American Hoist & Derrick Co., 895 F.2d 1403, 1407 (Fed.Cir.1990); and (5) crafting the injunction. Accordingly, the judgment is affirmed in all respects save that part based on willful infringement.

Willful Infringement

Whether infringement is willful is a question of fact, findings on which are reviewable under the clearly erroneous standard of Rule 52(a), Fed.R.Civ.P. CPG Prods. Corp. v. Pegasus Luggage, Inc., 776 F.2d 1007, 1015, 227 USPQ 497, 502 (Fed.Cir.1985). Willfulness is determined from the totality of the circumstances, King Instrument Corp. v. Otari Corp., 767 F.2d 853, 867, 226 USPQ 402, 412 (Fed.Cir.1985), and must be proven by clear and convincing evidence, E.I. du Pont de Nemours & Co. v. Phillips Petroleum Co., 849 F.2d 1430, 1440, 7 USPQ2d 1129, 1137 (Fed.Cir.), cert. denied, --- U.S. ----, 109 S.Ct. 542, 102 L.Ed.2d 572 (1988).

The district court found that Intersystems "took no action to ascertain whether the samplers it was producing would infringe." However, the district court also found that Intersystems was aware of each of the patents only "as of" the date on which suit was filed on each. Gustafson does not challenge that finding, but argues, from its version of bits and pieces of the record, that the court might have found earlier awareness of the patents. Gustafson forgets that we do not sit to find facts or to decide hypotheticals.

In a sequence of cases involving claims of willful infringement, this court has evolved a jurisprudence applicable to situations in which a product found an infringement at trial had been manufactured before the patent issued. In State Industries, Inc. v. A.O. Smith Corp., 751 F.2d 1226, 1236, 224 USPQ 418, 425 (Fed.Cir.1985), State sued Smith twenty-two days after its patent issued and without notifying the defendant of the alleged infringement. Under the circumstances of that case, we overturned a finding of willfulness stating: "[t]o willfully infringe a patent, the patent must exist and one must have knowledge of it." Id., 751 F.2d at 1236, 224 USPQ at 425 (emphasis in original). Under the same circumstances, we sustained a finding of nonwillfulness in American Original Corp. v. Jenkins Food Corp., 774 F.2d 459, 465, 227 USPQ 299, 302-03 (Fed.Cir.1985). In Power Lift, Inc. v. Lang Tools, Inc., 774 F.2d 478, 482, 227 USPQ 435, 438 (Fed.Cir.1985), we sustained a jury finding of willful infringement, distinguishing State Industries because Lang had been earlier warned and knew of the patent the day it issued. In Shiley, Inc. v. Bentley Laboratories, Inc., 794 F.2d 1561, 1568, 230 USPQ 112, 115 (Fed.Cir.1986), cert. denied, 479 U.S. 1087, 107 S.Ct. 1291, 94 L.Ed.2d 148 (1987), we sustained a jury finding of willfulness, explaining that State Industries did not lay down a per se rule that willful infringement could never be found when manufacture began before issuance of a patent, and applied the "totality of the circumstances" guideline applicable to willful infringement generally, as in Central Soya Co. v. George A. Hormel & Co., 723 F.2d 1573, 1577, 220 USPQ 490, 492 (Fed.Cir.1983), King Instrument, 767 F.2d at 867, 226 USPQ at 412, and Machinery Corp. v. Gullfiber AB, 774 F.2d 467, 473, 227 USPQ 368, 372 (Fed.Cir.1985). In Pacific Furniture Mfg. Co. v. Preview Furniture Corp., 800 F.2d 1111, 1114-15...