Pregis Corp. v. Kappos

• Decision Date: 06 December 2012
• Docket Number: 2010–1532.,Nos. 2010–1492,s. 2010–1492
• Citation: 700 F.3d 1348
• Parties: PREGIS CORPORATION, Plaintiff–Cross Appellant, v. David J. KAPPOS, Undersecretary of Commerce for Intellectual Property and Director, United States Patent and Trademark Office, Defendants–Appellees, and Free–Flow Packaging International, Inc., Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

700 F.3d 1348

PREGIS CORPORATION, Plaintiff–Cross Appellant,

v. David J. KAPPOS, Undersecretary of Commerce for Intellectual Property and Director, United States Patent and Trademark Office, Defendants–Appellees,andFree–Flow Packaging International, Inc., Defendant–Appellant.

Nos. 2010–1492, 2010–1532.

United States Court of Appeals, Federal Circuit.

Dec. 6, 2012.

James W. Dabney, Fried Frank Harris Shriver, of New York, NY, argued for plaintiff-cross appellant. With him on the brief were Stephen S. Rabinowitz and Henry C. Lebowitz; John F. Duffy, of Washington, DC.

Scott R. McIntosh, Attorney, Appellate Staff, Civil Division, United States Department of Justice, of Washington, DC, arguedfor defendants-appellees. With him on the brief were Tony West, Assistant Attorney General, and Neil H. MacBride, United States Attorney. Of counsel on the brief were Raymond T. Chen, Solicitor, and Scott Weidenfeller, Associate Solicitor, United States Patent and Trademark Office, of Alexandra, VA.

Robert Francis Altherr, Jr., Banner & Witcoff, Ltd., of Washington, DC, argued for defendant-appellant. With him on the brief were Joseph M. Potenza, Bradley C. Wright, Christopher B. Roth and Nina L. Medlock.

Before PROST, CLEVENGER, and REYNA, Circuit Judges.

REYNA, Circuit Judge.

Free–Flow Packaging International, Inc. (“Free–Flow”) appeals the denial of its motions for judgment as a matter of law after a jury verdict of noninfringement and invalidity of certain claims of U.S. Patent Nos. 7,325,377 (“Fuss '377”), 7,526,904 (“Fuss '904”), and 7,536,837 (“Perkins '837”). Pregis Corporation (“Pregis”) cross-appeals the dismissal of its claim seeking judicial review under the Administrative Procedure Act of the decision of the United States Patent and Trademark Office (“PTO”) to issue Fuss '377, Fuss '904, Perkins '837, and U.S. Patent No. 7,361,397 (“Perkins '397”) (collectively, the “Free–Flow Patents”). Because we conclude the district court correctly denied Free–Flow's motions for judgment as a matter of law regarding obviousness, and correctly dismissed Pregis' claim for judicial review under the Administrative Procedure Act, this court affirms.

I. Background

Free–Flow and Pregis are competitors in the air-filled packaging cushion industry. Air-filled cushions are used to fill space in shipping boxes carrying lightweight items that do not take up all the available space in a box. Demand for lightweight packaging rose rapidly beginning in about 1999 due to the growth of internet retail sales. “Air-pillow” packaging emerged as a preferred alternative to polystyrene foam, “peanuts,” or crumpled paper as filling material. Free–Flow and Pregis both manufacture pre-configured plastic film and machines that inflate and seal the film to produce air-pillow packaging.

Free–Flow holds three patents relating to air-filled packaging technology for which infringement and validity are at issue on appeal: the Fuss '377, Fuss ' 904, and Perkins '837 patents. These patents claim priority to applications filed in late 1999 and early 2000. Fuss '377, issued February 5, 2008, claims an apparatus for making air-filled packing cushions from a preconfigured plastic film material. The apparatus comprises a feed mechanism for drawing the edge of the film along a path, an elongated guide member adapted to be inserted into a channel in the preconfigured film material to inject air into the film, and a sealing mechanism to close the air-filled film chambers. The sealing mechanism comprises a pair of blocks disposed on opposite sides of the film and a pair of belts that carry the film past the blocks, “wherein at least one of the blocks has a source of heat” used to seal the film. Fuss '377 col. 8, ll. 1–29. Fuss '904, issued May 5, 2009, is a continuation of the Fuss ' 377 patent and claims a system for making air-filled cushions. The system comprises a preconfigured film with cushion chambers and a longitudinally extending channel near the edge of the film, and an apparatus for inflating and sealing the preconfigured film. Fuss '904 col. 7, l. 56—col. 8, l. 1. Like Fuss '377, the asserted claims of Fuss '904 require that the filling and sealing apparatus has a block that “has a source of heat.” Id. at col. 8, ll. 18–19.

The Perkins '837 patent, issued May 26, 2009, claims a system comprising a preconfigured film and a machine for inflating the film to produce air-filled cushions. The asserted claims of the Perkins '837 patent all require a plastic film to be drawn “through inflation, sealing and slitting mechanisms in a planar path.” Perkins '837 col. 14, l. 6—col. 16, l. 33. The claimed system is illustrated in Figure 16 of the Perkins '837 patent:

Image 1 (3.77" X 1.54") Available for Offline Print

Perkins '837, Fig. 16

At the time Free–Flow's claimed inventions were made, machines for producing air pillow packaging already were on the market. Free–Flow claims to have improved on prior art machines by increasing the ease of loading film, and by creating a more reliable seal to produce uniformly-inflated air cushions. Free–Flow markets its own air cushion machines, including the EZ I and EZ II machines, and corresponding preconfigured film. The EZ machine was first introduced in the United States in February 2001. Sales of EZ film grew to more than $8.4 million in the third full year following launch, which represented a 136% increase over the three year period.

II. Procedural history

This action began on April 29, 2009, when Pregis filed suit in the United States District Court for the Eastern District of Virginia seeking a declaratory judgment of noninfringement and invalidity of the Fuss '377 patent. Pregis also took the unusual step of suing the PTO, its then-acting Director John J. Doll, and Free–Flow under the Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701–706, to prevent the issuance of two then-pending Free–Flow patent applications. Those two applications issued as the Fuss '904 and Perkins '837 patents.

Pregis then amended its complaint to allege that the issuance of the patents by the PTO was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law. Pregis alleged that the PTO failed to discharge its statutory duty to determine whether the claims of the patents were nonobvious over the prior art as required by 35 U.S.C. § 103(a), and that the PTO's stated reasons for issuing the patents were insufficient to support the conclusion that the allowed claims were nonobvious. Pregis sought judgment to hold unlawful and set aside the actions of the PTO in issuing the Perkins '837 and Fuss '904 patents. Pregis also amended its complaint to include claims for declaratory judgment of noninfringement and invalidity of the Fuss '904 and Perkins '837 patents. Free–Flow filed counterclaims for infringement of the Fuss '377, Fuss '904, and Perkins '837 patents, and further alleged infringement of the Perkins '397 patent. In response, Pregis added the Perkins '397 patent to its APA claims.

The district court dismissed Pregis' APA claims for lack of subject matter jurisdictionon August 14, 2009. In a bench ruling, the court held “the Patent Act and its own scheme clearly expresses Congress' intent to preclude putative third party infringers from seeking judicial review” under the APA of PTO decisions to issue patents. J.A. 3775.

A jury trial was held on February 1–25, 2010 on the issues of infringement and obviousness. The jury returned a verdict finding all asserted claims of Fuss '377 (claims 1, 3, and 4), Fuss '904 (claims 4, 6, 7, and 10), and Perkins '837 (claims 1–3 and 5–14) invalid as obvious, but found the asserted claims of Perkins '397 not invalid. The jury found none of the asserted claims of the Fuss '337, Perkins '837, or Perkins '397 patents infringed, and found only claim 10 of Fuss '904 infringed. The jury found no willful infringement and awarded zero damages to Free–Flow. The district court denied Free–Flow's post-trial motions for judgment as a matter of law as to infringement, willful infringement, validity, and damages. Pregis Corp. v. Doll, No. 1:09–cv–467, slip op. at 3 (E.D.Va. Aug. 10, 2010).

Free–Flow appeals the denial of its motions for judgment as a matter of law as to validity and infringement of the Fuss '904, Fuss '377 and Perkins '837 patents. On appeal, Free–Flow does not contest the district court's denial of judgment as a matter of law as to infringement of the Perkins '397 patent. Pregis cross-appeals the dismissal of its APA claims, the district court's grant of summary judgment in favor of Free–Flow on Pregis' additional invalidity defenses, and additional rulings by the district court including the jury instructions and burden of proof applied to the invalidity defenses. This court has jurisdiction over the appeal and cross-appeal under 28 U.S.C. § 1295(a)(1).

III. Standard of review

This court reviews the grant or denial of a motion for judgment as a matter of law under regional circuit law, in this case the United States Court of Appeals for the Fourth Circuit. Revolution Eyewear, Inc. v. Aspex Eyewear, Inc., 563 F.3d 1358, 1370 (Fed.Cir.2009). The Fourth Circuit reviews a district court's denial of judgment as a matter of law de novo. In re Wildewood Litigation, 52 F.3d 499, 502 (4th Cir.1995). The reviewing court determines “whether a jury, viewing the evidence in the light most favorable to [the prevailing party], could have properly reached the conclusion reached by the jury.” Id. Entry of judgment as a matter of law is not appropriate when “there is substantial evidence in the record upon which the jury could find for [the prevailing party].” Id.

Federal Circuit law applies to “issues of substantive patent law and certain procedural issues pertaining to patent law.” Research Corp. Techs., Inc. v. Microsoft Corp., 536 F.3d 1247, 1255 (Fed.Cir.2008); see also Midwest Indus. Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1359 (Fed.Cir.1999) (en banc in relevant...