Orion Ip LLC v. Hyundai Motor Am.

• Decision Date: 20 July 2010
• Docket Number: No. 2009-1130.,2009-1130.
• Citation: 605 F.3d 967
• Parties: ORION IP, LLC, Plaintiff-Appellee,v.HYUNDAI MOTOR AMERICA, Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

605 F.3d 967

ORION IP, LLC, Plaintiff-Appellee,v.HYUNDAI MOTOR AMERICA, Defendant-Appellant.

No. 2009-1130.

United States Court of Appeals Federal Circuit.

May 17, 2010.

Rehearing and Rehearing En Banc Denied July 20, 2010.

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Frederick S. Frei, Andrews Kurth LLP, of Washington, DC, argued for plaintiff-appellee. With him on the brief was Elizabeth A. Wiley, The Wiley Firm PC, of Austin, TX. Of counsel on the brief were Jon E. Wright and Byron L. Pickard, Sterne, Kessler, Goldstein & Fox PLLC, of Washington, DC.

Gene C. Schaerr, Winston & Strawn LLP, of Washington, DC, argued for defendant-appellant. With him on the brief were Geoffrey P. Eaton and Jacob Loshin. Of counsel on the brief were A.M. (Russ) Meyer, Jr. and Robert P. Latham, Jackson Walker, LLP, of Dallas, TX; and Douglas R. McSwane, Jr., Potter Minton, P.C., of Tyler, TX.

Richard A. Samp, Washington Legal Foundation, of Washington, DC, for amicus curiae Washington Legal Foundation. With him on the brief was Daniel J. Popeo.

Before GAJARSA, PLAGER, and LINN, Circuit Judges.

GAJARSA, Circuit Judge.

Hyundai Motor America (“Hyundai”) appeals from the United States District Court for the Eastern District of Texas's (the “district court's”) ruling of no unenforceability for inequitable conduct and denial of Hyundai's motion for judgment as a matter of law (“JMOL”) and a new trial. The district court denied the JMOL motion by finding inter alia that (1) U.S. Patent No. 5,367,627 (the “'627 patent”) was not invalid on anticipation or obviousness grounds; and that (2) it was not error (i) to instruct the jury that the critical date was November 10, 1988, (ii) to fail to instruct the jury that an inventor's own secret commercial use could invalidate the patent under § 102(b), and (iii) to fail to explicitly instruct the jury that obviousness can be based on a single reference. We reverse the district court's denial of judgment as a matter of law on validity because there is insufficient evidence to support the jury's verdict of no anticipation. However, because the district court did not abuse its discretion in its analysis of the inequitable conduct counterclaim, we affirm the judgment of no unenforceability.

BACKGROUND

The '627 patent, styled “Computer-Assisted Parts Sales Method,” claims a method for assisting a salesperson in selecting appropriate parts corresponding to a customer's particularized need using a computerized system. The invention eliminates the need for salespersons to use more cumbersome and time-consuming paper catalogs and order forms. '627 patent col. 1 ll.15-50. The '627 patent teaches that when a customer requests a part, the salesperson uses an electronic system to search for the appropriate part, determines whether the appropriate part is available and how much it costs, and then provides this information to the customer. The three asserted claims of the '627 patent cover these four basic steps:

1. A computerized method of selling parts for particular equipment specified by a customer comprising the steps of:

a) receiving information identifying a customer's parts requirements for the equipment, comprising the step of receiving equipment application information, comprising an identification of the equipment with which one or more parts are to be used;

b) Electronically specifying information identifying a plurality of parts and specifications for the parts;

c) Gathering Parts-Related Information For One Or More Parts Within The Plurality Of Parts Which Meets The Customer's Requirements, Comprising The Step Of Electronically Associating At Least One Of The Parts Within The Plurality Of Parts With The Received Equipment Application Information; And

d) receiving the gathered parts-related information and compiling the parts-related information into a proposal meeting the customer's requirements.

7. The method of claim 1 wherein the step (d) further comprises the step of including within the proposal price information corresponding to the one or more parts which meets the customer's requirements.

8. The method of claim 1 wherein the step (d) comprises the step of including within the proposal graphical information corresponding to the one or more parts which meets the customer's requirements.

'627 patent col.30 II.4-56 (emphases added).

The inventor, Jerome Johnson, worked at a farm equipment dealership and developed a way to compile parts information into sales proposals using a computer. Mr. Johnson's company, Clear With Computers, LLC, also began to develop its own parts-sales software that eventually became known as “CASS Parts” (short for “Computer-Assisted Sales System”). CASS Parts was an embodiment of the general four-step method that would later be claimed in the ' 627 patent. In 2004, Orion IP, LLC (“Orion”) acquired the rights to the ' 627 patent.

On August 30, 2005, Orion sued Hyundai and twenty other automakers, alleging that their online sales systems (here, hyundaiusa.com and hyundaidealer.com) infringed the '627 patent and another patent, U.S. Patent No. 5,615,342 (the “'342 patent”). Orion settled with all other defendants prior to trial. At trial, Hyundai alleged that it did not infringe the '627 patent and that the patent was invalid. The parties tried the case to a jury. The jury found that Hyundai infringed the '627 patent and its infringement of that patent was willful. The jury also determined that the '627 patent was not invalid and that Hyundai did not infringe the '342 patent. The jury awarded Orion $34 million in damages for Hyundai's infringement of the '627 patent. The court augmented the $34 million in damages with pre-judgment interest, post-judgment interest, and an ongoing two-percent royalty on post-verdict parts sales. The district court directed the entry of final judgment on the verdict and denied Hyundai's post-judgment motions for JMOL or a new trial.

On JMOL, Hyundai had argued that the evidence presented to the jury established that the '627 patent was anticipated by prior art electronic parts catalogs, specifically the Bell & Howell IDB2000 system. Bell & Howell developed and sold the IDB2000 system in 1987. Under a 1987 distribution agreement between Bell & Howell and Reynolds & Reynolds, the latter distributed and supported the IDB2000 electronic parts catalog under the Reynolds & Reynolds PartsVision private label.¹ The IDB2000 system, as described in a Reynolds & Reynolds promotional publication entitled “Electronic Parts Catalog,” was identified as an automated system for the sale of parts that allowed salespersons to sell parts faster and with more accuracy. The Electronic Parts Catalog promotional publication lists nine steps in the IDB2000 system. It provides an example, with illustrations, of a customer requiring a brake master cylinder for a 1986 Pontiac Grand Am. Using a touch-screen, the salesperson at the counter:

Step 1: selects the desired make-Pontiac

Step 2: selects the desired year-1986

Step 3: selects the desired model-Grand AM

Step 4: selects the desired parts group-Group 4-transmission and brake

Step 5: selects the appropriate illustration-Illustration # 17-1985-86 “N” brake pedal and master cylinder mounting

Step 6: selects the part call-out number-# 16 cylinder, brake motor

Step 7: At this point the PartsVision system has “found the correct part and has listed it on a shopping list. Now the counterman can find more parts or check inventory, price the part and print the invoice ... all from the same workstation.”

Step 8: builds a shopping list, if needed

Step 9: selects the integration function key to “display the normal inventory detail,” “prices the part, and allows the counterman to complete preparation of a wholesale or retail price.”

Orion challenged Hyundai's anticipation evidence on the sole basis that the IDB2000 system did not generate a customer “proposal” as required by claim 1, step (d). The district court had construed the term “proposal” to mean “information intended for conveyance to a potential customer.” Orion IP, LLC v. Mercedes-Benz USA, LLC, 516 F.Supp.2d 720, 722 (E.D.Tex.2007) (adopting the claim construction the court issued in Orion IP, LLC v. Staples, Inc., 406 F.Supp.2d 717, 724 (E.D.Tex.2005)). At trial, Orion distinguished the IDB2000 system by arguing that because it generated information related to the dealer's markup and cost, as per step 9 above, it did not generate a proposal since a salesperson would not want to disclose a wholesale price to a retail customer. The district court concluded that both parties presented evidence at trial as to whether the IDB2000 system generated a “proposal,” but because the jury had weighed the evidence and found the IDB2000 system did not anticipate the '627 patent, it would not reweigh the evidence.

The district court had jurisdiction under 28 U.S.C. § 1338(a), and we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

We review the denial of a motion for JMOL “under the law of the regional circuit where the appeal from the district court normally would lie.” z4 Techs., Inc. v. Microsoft Corp., 507 F.3d 1340, 1346 (Fed.Cir.2007) (applying Fifth Circuit law). The Fifth Circuit reviews a denial of JMOL de novo. Cambridge Toxicology Group, Inc. v. Exnicios, 495 F.3d 169, 179 (5th Cir.2007). JMOL “is appropriate only if the court finds that a ‘reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue.’ ” i4i Ltd. P'ship v. Microsoft Corp., 598 F.3d 831, 841 (Fed.Cir.2010) (quoting Fed.R.Civ.P. 50(a)(1) in applying Fifth Circuit law). The Fifth Circuit “describes appellate review of a JMOL denial as a determination whether ‘the facts and inferences point so strongly and overwhelmingly in favor of one party that the court concludes that reasonable jurors could not arrive at a contrary verdict.’ ” Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1328 (Fed.Cir.2008) (quoting Harris Corp. v. Ericsson Inc., 417...