Proveris Scientific Corp. v. Innovasystems, Inc.

• Decision Date: 13 January 2014
• Docket Number: Nos. 2013–1166,2013–1190.,s. 2013–1166
• Citation: 739 F.3d 1367
• Parties: PROVERIS SCIENTIFIC CORPORATION (formerly known as Image Therm Engineering, Inc.), Plaintiff–Cross–Appellant, v. INNOVASYSTEMS, INC., Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

739 F.3d 1367

PROVERIS SCIENTIFIC CORPORATION (formerly known as Image Therm Engineering, Inc.), Plaintiff–Cross–Appellant,

v.INNOVASYSTEMS, INC., Defendant–Appellant.

Nos. 2013–1166, 2013–1190.

United States Court of Appeals,Federal Circuit.

Jan. 13, 2014.

Susan Hanmer Farina, Proveris Scientific Corporation, of Marlborough, MA, argued for plaintiff-cross-appellant. With her on the brief was Victor H. Polk, Jr., Greenberg Traurig LLP, of Boston, MA.

Joseph F. Posillico, Fox Rothschild, LLP, of Philadelphia, PA, argued for defendant-appellant. With him on the brief was Frank T. Carroll.

Before LOURIE, SCHALL, and PROST, Circuit Judges.

PROST, Circuit Judge.

Innovasystems, Inc. (“Innova”) appeals from two final judgments of the U.S. District Court for the District of Massachusetts holding Innova in contempt of that court's May 11, 2007 injunction and awarding sanctions in the amount of $878,205. Proveris Scientific Corp. (“Proveris”) cross-appeals the district court's denial of sanctions for certain of Innova's sales. Because we conclude that the district court erred in failing to construe the disputed claim language, we vacate the contempt order and remand for claim construction and renewed contempt proceedings.

Background

Proveris is the owner of U.S. Patent No. 6,785,400 (“'400 patent”). The ' 400 patent relates to a mechanism for evaluating aerosol spray plumes. The apparatus claimed therein is used to observe the delivery of drugs that are administered through spray devices, such as inhalers or nasal sprays. The invention involves triggering a spray plume and collecting data on the plume via an illumination device and an imaging device.

Innova previously made and sold a device known as the Optical Spray Analyzer (“OSA”). In 2005, Proveris filed a patent infringement lawsuit against Innova, alleging that the OSA product infringed the '400 patent. Innova conceded infringement of claims 3–10 and 13, but disputed infringement of claims 1–2. The district court excluded the testimony of Innova's experts and consequently ruled in favor of Proveris on invalidity. After a jury trial on the remaining issues, the jury found that Innova did not infringe claims 1 or 2, and that no damages had been proven. However, based on the conceded infringement of claims 3–10 and 13, the district court granted Proveris a permanent injunction prohibiting Innova from “making, using, selling, offering for sale or importing into or exporting out of the United States” the OSA product. We affirmed. Proveris Scientific Corp. v. Innovasystems, Inc., 536 F.3d 1256 (Fed.Cir.2008).

After that time, Innova modified its OSA product and began selling a new product known as the Aerosol Drug Spray Analyzer (“ADSA”) that it argues does not infringe independent claim 3 of the '400 patent. Innova claims that the OSA product allowed a user to identify what range of images he or she wanted to analyze before activating the spray plume, while the ADSA device requires the user to first activate the spray plume and then later determine what range of images he or she would like to analyze. It contends that this is a significant modification that renders the ADSA device non-infringing because the preamble of claim 3 specifies that the image data may be captured “at a predetermined instant in time.”

Proveris disagreed with Innova's interpretation of that claim language and in March 2010 filed a contempt motion based on Innova's manufacture and sale of the ADSA product. The district court initially scheduled a Markman hearing to construe the disputed claim term, but ultimately ruled that, because Innova could have raised claim construction issues in the underlying infringement action, the court would not construe claim 3 or import a limitation from the preamble of claim 3. The district court also said that, because Innova had already attempted to challenge the validity of claim 3 during the underlying infringement action, it could not now raise new invalidity arguments during the contempt proceedings. On the merits, the district court entered a contempt order against Innova, thereby implicitly finding that the ADSA product was not more than colorably different from the infringing OSA product and that it, too, infringed the '400 patent.

A bench trial was then held on the issue of sanctions. The court found that Innova's violation of the injunction had been willful and ordered disgorgement of any profits Innova had acquired from sales of the ADSA product. Proveris also sought to recover profits from Innova's sale of various component parts to overseas locations, but the district court ruled that those actions did not fall within the scope of the injunction, so Proveris would have to establish liability in a separate action before damages could be awarded for those sales.

Innova has appealed both the contempt order and the ensuing sanctions. Proveris has cross-appealed certain aspects of the district court's sanctions ruling.

Discussion

In evaluating whether an injunction against continued infringement has been violated by a newly accused product, courts must follow the two-step test outlined in TiVo Inc. v. EchoStar Corp., 646 F.3d 869 (Fed.Cir.2011) (en banc). First, a party seeking to enforce an injunction must show that “the newly accused product is not more than colorably different from the product found to infringe.” Id. at 882. The analysis should focus on “those aspects of the accused product that were previously alleged to be, and were a basis for, the prior finding of infringement, and the modified features of the newly accused product.” Id. Where one or more of the elements previously found to infringe has been modified or removed, the court must determine whether that modificationis significant. Id. If so, the newly accused product is more than colorably different from the infringing product, and contempt is not the appropriate remedy. Id. Instead, a new infringement action must be brought regarding the newly accused product. If, however, the court concludes that the differences are not more than colorable, the court must then go on to the second step and determine whether the newly accused product in fact infringes the relevant claims. Id. at 883.

Because the district court decided contempt based on the parties' cross-motions for summary judgment, we review the contempt ruling de novo. See MeadWestVaco Corp. v. Rexam Beauty & Closures, Inc., 731 F.3d 1258, 1264 (Fed.Cir.2013). Summary judgment is appropriate when, drawing all justifiable inferences in the nonmovant's favor, there exists no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Sanctions awards are reviewed for an abuse of discretion. TiVo, 646 F.3d at 883.

A. Colorable Differences

Innova argues that the OSA product was admitted to infringe claim 3 in part because that device had the ability to specify which images should be captured “at a predetermined time,” meaning before the spray plume was activated. And, as explained above, Innova claims to have removed that feature from the ADSA product. Thus, following the TiVo analysis, Innova argues that the ADSA product is more than colorably different from the OSA as a matter of law.

Innova's position is based on a misreading of TiVo. Even if it were true that this particular feature was a basis for the prior finding of infringement—a fact that Proveris disputes ¹— TiVo makes clear that the court must still determine whether that modification was significant.646 F.3d at 882.

We conclude that it was not. Indeed, it is not at all clear from the record whether Innova's purported change actually had any effect. In fact, the User Manuals for both products appear to instruct the user to select the range of images to be analyzed after the actual spray event takes place. Compare J.A. 204–05, 227 with J.A. 1054–55, 1099. Based on this evidence, the district court noted on the record that it was “quite clear” that Innova's alleged redesign “was not truly an alteration at all.” J.A. 46–47. But regardless, even if Innova did make some small changes to the product's software, a comparison of the User Manuals demonstrates that the two products are functionally identical. Thus, we agree with the district court that the ADSA product is not more than colorably different from the infringing OSA product.

B. Infringement

After a finding that two products are not more than colorably different, a district court must go on to determine whether the newly accused product in fact infringes the original patent. TiVo, 646 F.3d at 883. In conducting an infringement analysis, a court must first determine the meaning of any disputed claim terms and then compare the accused device to the claims as construed. Wavetronix LLC v. EIS Elec. Integrated Sys., 573 F.3d 1343, 1354 (Fed.Cir.2009) (citing Markman v. Westview Instruments, Inc., 52 F.3d 967, 976 (Fed.Cir.1995)). Here, the district court declined to construe the disputed claim language because any arguments about the construction of claim 3 should have been raised in the underlying infringement action.²

It is true that we have previously held that in contempt proceedings, “out of fairness, the district court is bound by any prior claim construction that it had performed in the case.” TiVo, 646 F.3d at 883. However, here, there was no prior claim construction because Innova had conceded infringement. Thus, it simply cannot be said that it was the “law of the case” that the preamble was not a claim limitation. See, e.g., Bass Pro Trademarks, LLC v. Cabela's, Inc., 485 F.3d 1364, 1369 (Fed.Cir.2007) (after defendant admitted infringement and agreed to be permanently enjoined from future infringement, this court engaged in claim construction in determining whether a later accused device violated the injunction). We therefore conclude that the district court...