Lazare Kaplan Int'l, Inc. v. Photoscribe Techs., Inc.

Decision Date29 July 2013
Docket NumberNo. 2012–1247.,2012–1247.
Citation714 F.3d 1289
PartiesLAZARE KAPLAN INTERNATIONAL, INC., Plaintiff–Appellant, v. PHOTOSCRIBE TECHNOLOGIES, INC. and Gemological Institute Of America, Defendants–Appellees.
CourtU.S. Court of Appeals — Federal Circuit

OPINION TEXT STARTS HERE

Deanne E. Maynard, Morrison & Foerster, LLP, of Washington, DC, argued for plaintiff-appellant. With her on the brief were Marc A. Hearron and Natalie R. Ram; Harold J. McElhinny, of San Francisco, CA; James E. Hough, of New York, NY.

John Allcock, DLA Piper, LLP, of San Diego, CA, argued for defendants-appellees. With him on the brief were Nancy O. Dix and Stanley J. Panikowski. Of counsel was John David Kinton.

Before LOURIE, DYK, and REYNA, Circuit Judges.

Opinion for the court filed by Circuit Judge LOURIE. Dissenting opinion filed by Circuit Judge DYK.

LOURIE, Circuit Judge.

Lazare Kaplan International, Inc. (Lazare Kaplan) appeals from the order of the United States District Court for the Southern District of New York granting summary judgment of invalidity of claims 1 and 7 of U.S. Patent 6,476,351 (the “'351 patent”) and granting a motion under Federal Rule of Civil Procedure 60(b) filed by Photoscribe Technologies, Inc. and the Gemological Institute of America (collectively Photoscribe) seeking to vacate the district court's prior judgment finding the same claims not invalid. Lazare Kaplan Int'l, Inc. v. Photoscribe Techs., Inc., No. 06 Civ. 4005(TPG), 2012 WL 505742, at *14 (S.D.N.Y. Feb. 15, 2012) (“ Lazare Kaplan IV ”). Lazare Kaplan requests that, if remanded, the case be reassigned to a different judge. For the reasons set forth below, we reverse the grant of relief under Rule 60(b), vacate the finding of invalidity with instructions to reinstate the original judgment of “not invalid,” and decline the request to reassign.

Background

Lazare Kaplan owns the '351 patent, which claims methods and systems for using lasers to make microinscriptions on gemstones. In 2006, Lazare Kaplan brought suit for infringement of two patents, including the '351 patent, against Photoscribe in the United States District Court for the Southern District of New York. In response, Photoscribe filed counterclaims seeking declarations of invalidity.

Only claims 1 and 7 of the '351 patent are at issue in this appeal. Claim 1 recites a method of microinscribing a gemstone, with the final limitation requiring “controlling the directing of the focused laser energy based on the marking instructions and the imaging, to selectively generate a marking on the gemstone based on the instructions.” '351 patent col.26 ll.62–65. Claim 7 recites a corresponding system claim with a similar final limitation. See id. col.27 ll.17–35. The district court construed these “controlling the directing” limitations in claims 1 and 7 as follows: “controlling is based on the marking instructions generated by the operator of the machine, and automatic feedback derived from optical images of the gemstone during the laser burn process.” Lazare Kaplan Int'l, Inc. v. Photoscribe Techs., Inc., No. 06 Civ. 4005(TPG), 2008 WL 355605, at *1 (S.D.N.Y. Feb. 5, 2008) (“ Lazare Kaplan I ”). Finding that the accused machines did not use automatic feedback derived during the laser burn process, the district court granted summary judgment of no literal infringement of claims 1 and 7. Id. The district court found that disputed issues of fact precluded summary judgment of infringement under the doctrine of equivalents. Id.

After a trial held in 2008, the jury returned a verdict that Photoscribe did not infringe claims 1 or 7 under the doctrine of equivalents. Lazare Kaplan Int'l, Inc. v. Photoscribe Techs., Inc., No. 06 Civ. 4005(TPG), slip op. at 3 (S.D.N.Y. Jan. 22, 2009) (“ Lazare Kaplan II ”). The district court then issued a final judgment that claims 1 and 7 were not invalid and not infringed, either literally or under the doctrine of equivalents. Id. at 4 ¶¶ 1, 2, 5. Lazare Kaplan filed a notice of appeal from the judgment of noninfringement. Photoscribe, however, did not file a notice of appeal from the judgment that the asserted claims were not invalid.

In that prior appeal, we broadened the district court's construction of the “controlling the directing” limitations, finding that those limitations “include control based on either automated or manual feedback derived from optical images of a gemstone, before or during the laser burn process.” Lazare Kaplan Int'l, Inc. v. Photoscribe Techs., Inc., 628 F.3d 1359, 1369 (Fed.Cir.2010) (“ Lazare Kaplan III ”). We vacated both the grant of summary judgment of no literal infringement and the jury verdict of noninfringement under the doctrine of equivalents, as both were based on the district court's erroneous construction. Id. at 1370. In addition, we explicitly remanded the issue of infringement to the district court because we could not “determine with any certainty that the accused machines infringe the asserted claims under this new construction.” Id.

On remand, the district court held a case management conference, in which Lazare Kaplan argued that only infringement should be retried, not validity. Lazare Kaplan IV, 2012 WL 505742, at *4. Photoscribe responded that both infringement and validity were at issue because of the broadened claim construction. Id. The district court agreed with Photoscribe, stating, we are going to retry it on validity, because the validity decision of the jury in the first trial was on the basis of a claim construction which the Court of Appeals has reversed.” Id. The court stated that it “makes no sense” to do otherwise. Id. Photoscribe later moved for summary judgment of invalidity of claims 1 and 7, while Lazare Kaplan moved for summary judgment of infringement. Id. at *1. Photoscribe also moved under Rule 60(b) for relief from the district court's prior judgment, in Lazare Kaplan II, finding the claims not invalid. Id. The district court granted both of Photoscribe's motions and denied Lazare Kaplan's motion as moot. Id. at *14.

Lazare Kaplan timely appealed from the district court's rulings. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

Discussion
I. Reopening Validity In The Prior Remand

When reviewing a ruling under Rule 60(b),1 we generally defer to the law of the regional circuit in which the district court sits, here the Second Circuit, because that rule is procedural in nature and not unique to patent law. See, e.g., Louisville Bedding Co. v. Pillowtex Corp., 455 F.3d 1377, 1379–81 (Fed.Cir.2006) (applying Sixth Circuit law to review a ruling on a Rule 60(b) motion); Univ. of W. Va., Bd. of Trs. v. VanVoorhies, 342 F.3d 1290, 1294 (Fed.Cir.2003) (applying Fourth Circuit law); Engel Indus., Inc. v. Lockformer Co., 166 F.3d 1379, 1384 (Fed.Cir.1999) (applying Eighth Circuit law); Amstar Corp. v. Envirotech Corp., 823 F.2d 1538, 1550 (Fed.Cir.1987) (applying Tenth Circuit law). We do not accord such deference, however, when a district court's ruling under Rule 60(b) turns on substantive issues unique to patent law. See, e.g., Fiskars, Inc. v. Hunt Mfg. Co., 279 F.3d 1378, 1381 (Fed.Cir.2002) ([T]he issue before us—whether a lost profits damages award should be set aside because post-trial sales data may show the acceptability of a non-infringing alternative product—turns on a substantive area of patent law.”); Broyhill Furniture Indus., Inc. v. Craftmaster Furniture Corp., 12 F.3d 1080, 1083 (Fed.Cir.1993) (“The issues before us are whether a consent judgment enjoining infringement of a patent should be set aside pursuant to certain subsections of Rule 60(b) following a judicial determination that the patent was procured through inequitable conduct in the [U.S. Patent and Trademark Office].”).

Here, the issue is whether, on remand, a district court may reopen a prior final judgment as to patent validity, not appealed by either party, based on a claim construction modified by this court. Because this issue requires consistent and uniform application by district courts when handling patent cases, we resolve it as an issue of the law of this court. Fiskars, 279 F.3d at 1381;Broyhill, 12 F.3d at 1083. We find persuasive, however, certain decisions of our sister circuits, particularly the Second Circuit, on issues relevant to this appeal. Broyhill, 12 F.3d at 1083 n. 1.

We review a district court's ruling under Rule 60(b) for an abuse of discretion. Browder v. Dir., Ill. Dept. of Corrections, 434 U.S. 257, 263 n. 7, 98 S.Ct. 556, 54 L.Ed.2d 521 (1978). An abuse of discretion exists “when the trial court's decision is clearly unreasonable, arbitrary or fanciful, or is based on clearly erroneous findings of fact or erroneous conclusions of law.” Fiskars, 279 F.3d at 1382 (citing Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1460 (Fed.Cir.1998) (en banc)).

It is well-settled that a party must file a cross-appeal if, although successful in the overall outcome in the district court, the party seeks, on appeal, to lessen the rights of its adversary or to enlarge its own rights. El Paso Natural Gas Co. v. Neztsosie, 526 U.S. 473, 479, 119 S.Ct. 1430, 143 L.Ed.2d 635 (1999) (“Absent a cross-appeal, an appellee ... may not ‘attack the decree with a view either to enlarging his own rights thereunder or of lessening the rights of his adversary.’) (quoting United States v. Am. Ry. Express Co., 265 U.S. 425, 435, 44 S.Ct. 560, 68 L.Ed. 1087 (1924)); see also Bailey v. Dart Container Corp. of Mich., 292 F.3d 1360, 1362 (Fed.Cir.2002) (“It is only necessary and appropriate to file a cross-appeal when a party seeks to enlarge its own rights under the judgment or to lessen the rights of its adversary under the judgment.”). The Supreme Court has long recognized this cross-appeal rule as “inveterate and certain,” Morley Constr. Co v. Md. Cas. Co., 300 U.S. 185, 191, 57 S.Ct. 325, 81 L.Ed. 593 (1937), and the rule's application has been noted since the Court's earliest years, McDonough v....

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