Poly-America, L.P. v. Gse Lining Technology, Inc.

• Decision Date: 14 September 2004
• Docket Number: No. 04-1022.,04-1022.
• Citation: 383 F.3d 1303
• Parties: POLY-AMERICA, L.P., Plaintiff-Appellee, v. GSE LINING TECHNOLOGY, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

383 F.3d 1303

POLY-AMERICA, L.P., Plaintiff-Appellee, v. GSE LINING TECHNOLOGY, INC., Defendant-Appellant.

No. 04-1022.

United States Court of Appeals, Federal Circuit.

DECIDED: September 14, 2004.

COPYRIGHT MATERIAL OMITTED

Jerry R. Selinger, Jenkens & Gilchrist, of Dallas, TX, argued for plaintiff-appellee. With him on the brief were John C. Eichman and Timothy G. Ackermann.

Donald R. Dunner, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., of Washington, DC, argued for defendant-appellant. With him on the brief were Thomas H. Jenkins and Rachel H. Townsend. Of counsel on the brief were T. Michael Wall, Gardere Wynne Sewell LLP, of Houston, TX; and David M. Frischkorn, S. Richard Carden and Alison J. Baldwin, McDonell Boehnen Hulbert & Berghoff, of Chicago, IL.

Before MICHEL, LOURIE, and RADER, Circuit Judges.

LOURIE, Circuit Judge.

GSE Lining Technology, Inc. ("GSE") appeals from the post-trial decision of the district court denying its motion for judgment as a matter of law ("JMOL") that two of Poly-America, L.P.'s ("Poly-America's") patents relating to landfill liner technology were invalid. Poly-America, L.P. v. GSE Lining Tech., Inc., No. 3:00-CV-1457-D, 2003 WL 21946842 (N.D.Tex. Aug. 13, 2003) ("Post-Trial Order"). GSE also appeals from the denial of its motion for a new trial on damages. Id. Because we agree with the district court's claim construction with respect to Poly-America's patents and because there is sufficient evidence to support the jury's verdict, we affirm the denial of JMOL of invalidity for both patents. However, because the district court erred in permitting Poly-America to claim the lost profits of a related corporation, Poly-Flex, Inc. ("Poly-Flex"), in its damages calculations, we reverse the district court's denial of GSE's motion for a new trial on damages and remand for the district court to redetermine whether Poly-America has incurred lost profits.

BACKGROUND

Poly-America, L.P.¹ owns United States Patents 5,763,047, directed to a three-layered textured landfill liner, and 5,804,112, covering a method for making such a liner. Both patents have an effective filing date of April 3, 1996, and both issued in 1998. The patents disclose a blown-film liner that comprises a smooth inner layer bonded to textured outer layers. The texture in the outer layers is created by a blowing agent that erupts during the extrusion process, producing a surface useful for gripping sloped dirt surfaces. The inner layer protrudes from the outer textured layers, and, when welded to the smooth portion of an adjoining sheet, it forms a strong seal to create an effective barrier for landfill use.

The blown-film process employs a circular die to shape thermoplastic material into a long, hollow tube, and concentric channels in the die produce plastic sheets having multiple layers. The extruded material is then cut into rectangular sheets. Poly-America claims that its innovation went against the traditional understanding about the process used to create blown-film liners. It asserts that before its invention, the prevailing belief in the industry was that balanced thermoplastic flow and uniform velocity within a blown-film die were critical parameters for normal production. In contrast, Poly-America's invention called for blocking certain channels in the die that normally produced the outer layers, so that the liner would have a smooth layer without the textured portions. Poly-America claimed that a skilled artisan would not have intentionally obstructed a channel in a blown-film die for fear of damaging the equipment and incurring significant expense in repair and lost production time.

In July 2000, Poly-America, Inc. sued Serrot International, Inc. ("Serrot"), alleging infringement of the '047 and '112 patents. Serrot moved for summary judgment of invalidity, arguing that Poly-America's patents were invalid as anticipated. It argued that Gloucester Engineering manufactured for another company, Gundle Lining System, a die ("the Gundle die") that was capable of performing the method claimed in the '112 patent. That machine, Serrot claimed, was sold in 1987 and thus is anticipatory prior art under the 35 U.S.C. § 102(b) on-sale bar. Serrot also asserted that the '047 and '112 patent claims were anticipated or, in the alternative, were rendered obvious by another existing liner product, Friction Seal, made by a cast process, not a blown-film process. The district court rejected Serrot's theories of invalidity, and it denied Serrot's motion for summary judgment. Poly-America, Inc. v. Serrot Int'l, Inc., No. 3:00-CV-1457-D, 2001 WL 1335793 (N.D.Tex. Oct. 18, 2001) ("Claim Construction Order").

Serrot thereafter conceded infringement, and the case proceeded to trial before a jury on Serrot's invalidity defenses, willfulness, and damages. In December 2002, the jury returned a verdict in favor of Poly-America, Inc., concluding that the patents were not invalid and finding that Serrot had willfully infringed the patents. Poly-America, Inc. v. Serrot Int'l, Inc., No. 3:00-CV-1457-D, slip op. at 9-10, 17, 2002 WL 31802629 (N.D.Tex. Dec. 5, 2002) ("Jury Verdict"). The jury awarded damages of $7.15 million in lost profits and a reasonable royalty of $5.08 million. Id. at 17.

Following the jury verdict, GSE filed a post-trial motion for JMOL, arguing that the Poly-America patents were invalid for anticipation and obviousness. It also moved for JMOL or, alternatively, a new trial on damages, asserting that the jury's award was against the great weight of the evidence. The district court denied GSE's motions for JMOL of invalidity, but it did conclude that the jury's reasonable royalty award was unreasonable to the extent that the amount was greater than the maximum reasonable royalty damages award that was supported by the trial evidence. The court conditioned the denial of GSE's motion for a new trial on Poly-America's acceptance of a remittitur of $266,502.00 of the reasonable royalty award. Post-Trial Order, slip op. at 26.

Poly-America accepted the remittitur, and GSE now appeals from the denials of its motion for JMOL of invalidity and its motion for a new trial on damages. GSE does not appeal from the willfulness decision, nor is infringement at issue in this appeal. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

We review a district court's denial of a motion for JMOL of patent invalidity de novo, reapplying the standard used by the district court. Sextant Avionique, S.A. v. Analog Devices, Inc., 172 F.3d 817, 824 (Fed.Cir.1999). JMOL is appropriate when "a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue." Fed.R.Civ.P. 50(a)(1). When reviewing a court's denial of JMOL, we must "determine whether viewing the evidence in the light most favorable to the non-moving party, and giving the non-movant the benefit of all reasonable inferences, there is sufficient evidence of record to support a jury verdict in favor of the non-movant." Ericsson, Inc. v. Harris Corp., 352 F.3d 1369, 1373 (Fed.Cir.2003) (citation and internal quotation marks omitted).

The denial of a motion for a new trial is an issue not unique to patent law; thus, we apply the law of the regional circuit in which the district court sits — in this case, the Fifth Circuit. See WMS Gaming Inc. v. Int'l Game Tech., 184 F.3d 1339, 1361 (Fed.Cir.1999). In the Fifth Circuit, "[t]he decision to grant or deny a motion for a new trial will be disturbed only for abuse of discretion or misapprehension of the law." Woodfield v. Bowman, 193 F.3d 354, 358 (5th Cir.1999) (citing Mitchell v. Lone Star Ammunition, Inc., 913 F.2d 242, 252 (5th Cir.1990)). The Fifth Circuit affirms the denial of a motion for new trial "unless, on appeal, the party that was the movant in district court makes a clear showing of an absolute absence of evidence to support the jury's verdict, thus indicating that the trial court had abused its discretion in refusing to find the jury's verdict contrary to the great weight of the evidence." Whitehead v. Food Max of Miss., Inc., 163 F.3d 265, 269 (5th Cir.1998).

A. The '112 Patent

On appeal, GSE argues as it did in the district court that Poly-America's '112 method patent was anticipated by the sale of the Gundle die. GSE maintains that, because the die was capable of performing the process that Poly-America later claimed, the sale of the die was a § 102(b) on-sale bar. It claims that the district court relied on and misinterpreted In re Kollar, 286 F.3d 1326 (Fed.Cir.2002), as holding that a sale of a method does not constitute a sale within the meaning of § 102(b) until the method has been put into commercial practice. GSE argues that our decision in Minton v. National Ass'n of Securities Dealers, Inc., 336 F.3d 1373 (Fed.Cir.2003), holds otherwise, so that even though the Gundle die may not have been used to carry out the claimed process before the critical date of Poly-America's patent, its sale still represents a statutory bar to the patentability of the process. Additionally, it contends that the jury could not have reasonably concluded that the "choker slides" in the Gundle die were not the same as the "plugs" in the claims of the '112 patent.

Poly-America responds that the district court was correct to deny GSE's motion for JMOL because the process later claimed in the '112 patent was not ready for patenting when the Gundle die was sold in 1987. That defect, it argues, prevents the sale from becoming a bar to patentability. Poly-America asserts that our decision in Kollar is inapposite and that GSE has generally failed to show that the jury charge regarding the sale of the Gundle die was either erroneous or prejudicial. Also, Poly-America argues that the jury could have found a material difference between the "choker slides" and the claimed "plugs" and that such a finding was supported by...