New Tek Mfg., Inc. v. Beehner

• Decision Date: 29 July 2005
• Docket Number: No. S-03-457.,S-03-457.
• Citation: 702 N.W.2d 336,270 Neb. 264
• Parties: NEW TEK MANUFACTURING, INC., a Nebraska corporation, appellant, v. John A. BEEHNER et al., appellees.
• Court: Nebraska Supreme Court

702 N.W.2d 336

270 Neb. 264

NEW TEK MANUFACTURING, INC., a Nebraska corporation, appellant, v. John A. BEEHNER et al., appellees.

No. S-03-457.

Supreme Court of Nebraska.

July 29, 2005.

Roger P. Cox and Gregory D. Barton, of Harding, Shultz & Downs, Lincoln, and Roger D. Greer and Steven P. Fallon, of Greer, Burns & Crain, Ltd., Chicago, IL, for appellant.

William H. Selde and Michael G. Monday, of Sodoro, Daly & Sodoro, Omaha, for appellees.

HENDRY, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

GERRARD, J.

The plaintiff, New Tek Manufacturing, Inc. (New Tek), sued John A. Beehner, its former attorney, and his law office for professional negligence, alleging that Beehner's negligence had caused the expiration of a patent issued to New Tek. New Tek alleged that its patent had been infringed and that because of Beehner's negligence, New Tek was unable to sue the alleged infringer. The district court entered summary judgment against New Tek, concluding that the alleged infringer's device would not have been found to infringe on New Tek's patent, and that thus, New Tek had not been damaged by Beehner's conduct. The issues in this appeal are whether the district court correctly construed New Tek's patent and whether the district court correctly concluded that the accused device could not have been found to infringe on New Tek's patent. For the reasons that follow, we reverse the judgment of the district court and remand the cause for further proceedings.

BACKGROUND

The patented device at issue in this case is a "row following guidance device for a tractor-drawn row crop implement," designed to help operators of farm equipment guide implements through a crop field without accidentally deviating from the crop row and destroying planted crops. As the patent explains, tractor-drawn farm implements may carry groundworking tools spaced as close as 4 inches apart, and a tractor operator is generally situated in a cab located several feet above and forward of the implement, so it can be difficult to view the actual engagement of the tools with the ground. In an operation such as cultivating, only a slight misalignment of the tractor with the crop row may cause the implement to uproot several rows.

The patented device was intended, generally, to be a "row following guidance device" that connects the left and right sides of the forward end of an implement to the tractor, and adjusts the length of each left and right connection so that the implement will follow a crop row independently, even if the tractor deviates from the crop row. A wheel, following the crop row, signals a steering valve upon any deviation from the alignment of the implement with the crop row, and the steering valve corrects the deviation by lengthening one of the connections between the implement and the tractor and shortening the other connection.

Eugene Schmidt invented this "row following guidance device" and assigned his rights to Sunco Systems, Inc. (Sunco). A patent application was filed with the U.S. Patent and Trademark Office (the Patent Office) on April 24, 1985, and patent No. 4,640,365 (the '365 patent) was issued on February 3, 1987. After Schmidt saw a potentially infringing device at a farm equipment show, Sunco decided to broaden the patent by filing a reissue patent application on December 14, 1987.

In 1988, while the reissue patent application was pending, Sunco's counsel retired from the practice of law and recommended that Sunco retain Beehner. In 1989, New Tek was formed to assemble farm equipment based on Sunco parts, and the rights for the '365 patent and the reissue patent application were assigned to New Tek.

For purposes of this appeal, New Tek's allegations of Beehner's duties, and breach thereof, are not at issue. New Tek alleged that Beehner was responsible for pursuing the reissue patent application and maintaining the '365 patent, in part by ensuring that the maintenance fees for the '365 patent were filed. However, Beehner did not diligently prosecute the reissue patent application, nor did he pay the maintenance fees for the '365 patent, which became due in August 1990. Beehner revived the reissue patent application pursuant to a petition filed on December 18, 1990, but did not take action with respect to the '365 maintenance fee before the end of the maintenance fee grace period, which expired on February 3, 1991. Although this resulted in the expiration of the '365 patent and rendered the reissue patent application defective, Beehner continued prosecution of the reissue patent application. Eventually, New Tek lost patience with Beehner's prosecution of the reissue patent application and retained new counsel.

The reissue patent application was eventually allowed, and reissue patent No. 34,080 (the '080 patent) was issued on September 29, 1992. However, the '080 patent was defective because of the expiration of the '365 patent, of which New Tek was still unaware. On November 16, 1994, New Tek's counsel submitted the maintenance fee for the '080 patent to the Patent Office but, on December 19, was informed that the maintenance fee would not be accepted because the '080 patent had expired due to the failure to timely pay the maintenance fee for the '365 patent.

Ultimately, the Patent Office accepted New Tek's petition for late payment of the '365 maintenance fee, and the '365 patent was revived. However, New Tek lost the benefit of the expanded scope of the '080 patent — specifically, claim 22 of the '080 patent, which was not contained in the '365 patent, and will be explained in more detail below. Furthermore, the revival of the '365 patent did not afford New Tek protection from infringing uses that began between the expiration of the patent and the acceptance of the late maintenance fee. See 35 U.S.C. § 41(c)(2) at 754 (2000) ("[a] patent, the term of which has been maintained as a result of the acceptance of a payment of a maintenance fee . . . shall not abridge or affect the right of any person... who made, purchased, offered to sell, or used anything protected by the patent... after the 6-month grace period but prior to the acceptance of a maintenance fee").

New Tek filed suit against Beehner and his law office in the district court on December 12, 1995, alleging professional negligence. Beehner died during the pendency of the suit, and Beehner's estate was substituted (hereinafter the defendant). After proceedings unrelated to the issues presented in this appeal, the district court held a "Markman hearing" pursuant to Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed.Cir.1995), affirmed 517 U.S. 370, 116 S.Ct. 1384, 134 L.Ed.2d 577 (1996), and entered an order construing the '080 patent for purposes of this litigation.

The defendant then filed a motion for summary judgment, which the court sustained. The parties had narrowed their inquiry to a particular device made by Orthman Manufacturing, Inc. (the Orthman device). The court determined as a matter of law that the Orthman device would not have been found to infringe on the '080 patent. The court's construction of the '080 patent and its reasoning with respect to the hypothetical infringement of that patent will be discussed below in more detail, after an explanation of the legal principles governing the issues presented. New Tek's claim was dismissed to the extent that it relied on allegations of hypothetical third-party infringement on the '080 patent, and New Tek voluntarily dismissed its remaining claims so that it could proceed with this appeal on the issue of infringement.

ASSIGNMENTS OF ERROR

New Tek assigns, consolidated and restated, that the district court erred in (1) conducting a Markman hearing to construe the '080 patent claims instead of submitting claim construction to the jury; (2) failing to consider that the '080 patent had intrinsic value aside from potential enforcement against third parties for infringement; (3) concluding that element 4 of claim 22 of the '080 patent was a means-plus-function element pursuant to 35 U.S.C. § 112, ¶ 6 (2000); and (4) concluding that the accused device would not have been found to infringe the '080 patent under the doctrine of equivalents.

The defendant assigns several errors to the district court in a purported cross-appeal, arguing that the court erred in rejecting other grounds for dismissing New Tek's claims. However, the defendant did not comply with the requirements of Neb. Ct. R. of Prac. 9D(4) (rev.2001). A cross-appeal must be properly designated under rule 9D(4) if affirmative relief is to be obtained. Gourley v. Nebraska Methodist Health Sys., 265 Neb. 918, 663 N.W.2d 43 (2003). An appellee's argument that a lower court's decision should be upheld on grounds specifically rejected below constitutes a request for affirmative relief, and the appellee must cross-appeal in order for that argument to be considered. Wasikowski v. Nebraska Quality Jobs Bd., 264 Neb. 403, 648 N.W.2d 756 (2002). Thus, we will not consider the defendant's purported assignments of error, except insofar as the defendant argues that this court lacks subject matter jurisdiction over issues of patent law. Lack of subject matter jurisdiction may be raised at any time by any party or by the court sua sponte. In re Interest of Jaden H., 263 Neb. 129, 638 N.W.2d 867 (2002).

STANDARD OF REVIEW

A jurisdictional question which does not involve a factual dispute is determined by an appellate court as a matter of law. Cox Nebraska Telecom v. Qwest Corp., 268 Neb. 676, 687 N.W.2d 188 (2004).

Summary judgment is proper when the pleadings and evidence admitted at the hearing disclose that there is no genuine issue as to any material fact or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law. Blair v. State Farm Ins. Co., 269 Neb. 874, 697 N.W.2d 266 (2005). In reviewing a summary judgment, an...