Rf Delaware v. Pacific Keystone Technologies

• Decision Date: 21 April 2003
• Docket Number: No. 02-1508.,02-1508.
• Citation: 326 F.3d 1255
• Parties: RF DELAWARE, INC., Plaintiff-Appellant, v. PACIFIC KEYSTONE TECHNOLOGIES, INC., BCA Industrial Controls (1995) Limited, Clearwater Technologies, Inc., and Michael Morris, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

326 F.3d 1255

RF DELAWARE, INC., Plaintiff-Appellant, v. PACIFIC KEYSTONE TECHNOLOGIES, INC., BCA Industrial Controls (1995) Limited, Clearwater Technologies, Inc., and Michael Morris, Defendants-Appellees.

No. 02-1508.

United States Court of Appeals, Federal Circuit.

April 21, 2003.

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James J. Merek, Merek & Voorhees of Alexandria, VA, argued for plaintiff-appellant. With him on the brief was David H. Voorhees.

Richard R. Johnson, Shook, Hardy & Bacon, L.L.P., of Kansas City, MO, argued for defendants-appellees.

Before MICHEL, RADER, and SCHALL, Circuit Judges.

MICHEL, Circuit Judge.

Patentee RF Delaware, Inc. ("RFD") appeals the May 31, 2002, decision of the United States District Court for the Northern District of Alabama, RF Delaware, Inc. v. Pac. Keystone Techs., Inc., No. CV-01-PT-0348-M (N.D.Ala. May 31, 2002), entering summary judgment of non-infringement for the accused infringers, Pacific Keystone Technologies, Inc., BCA Industrial Controls Limited, Clearwater Technologies, Inc., and Michael Morris (collectively "Pacific") on the grounds that U.S. Patent No. 5,198,124 ("'124 patent") and U.S. Patent No. 5,314,630 ("'630 patent") did not cover the alleged infringing process and Pacific, a maker but not user of water filtering systems, did not commit any act of infringement. Because the district court erred in construing the claim terms "filter bed" and "filter media" in the broadest claims and also erred in granting summary judgment of non-infringement, we reverse the district court's judgment and remand the case for trial or other proceedings consistent with this opinion.

BACKGROUND

RFD owns the '124 and '630 patents, relating to the use and washing of an upflow filter in combination upflow and downflow water filtration systems. Both patents cover the same subject matter and share identical written descriptions. The '124 patent is entitled "Upflow Filter and Method of Washing Same" and the '630 patent is entitled "Systems and Methods for Clarifying Liquids." Claim 1 of the '124 patent reads:

1. A method of washing an upflow filter between service runs, said upflow filter including a filter bed having a non-buoyant particulate media filter layer through which influent to be filtered is directed in an upward direction during each service run for causing floc in said influent to be retained in said layer, said method of washing including the steps of:

(a) directing a combination of air and liquid in an upflow direction through the filter layer with the velocity of the liquid being less than one-half the minimum fluidization velocity of the filter layer for disrupting only some floc retained in said layer during a previous service run, while leaving some floc attached to said particulate media in said filter layer; and thereafter

(b) directing only liquid in an upflow direction through the filter layer at a velocity less than one-half the minimum fluidization velocity of the filter layer for removing disrupted floc from the filter while leaving in said layer floc attached to said particulate media of said filter layer.

'124 patent, col. 12, ll. 23-43 (emphases added). Claim 1 of the '630 patent reads:

1. In a method for clarifying water is a filter system wherein during a filtering mode step influent water is passed upwardly in a first zone through first particulate filter media contained therein and then sequentially is passed downward through a second zone through second particulate filter media contained therein, and during a backwash mode step liquid is passed upwardly through said particulate filter media in both said first and second zones, the improvement which comprises:

providing said first particulate media with a filter layer in the form of solid particles having a specific gravity in excess of 2 and an effective size greater than 1 millimeter; and

during backwashing of said first zone, causing a combination of air and liquid to flow upwardly through the filter layer with the liquid flow rate being less than the minimum fluidization velocity of the filter layer and with the air flow rate being in the range of approximately 1-9 Scfm/ft.².

'630 patent, col. 12, ll. 38-56 (emphases added). One key issue of this case is whether the terms "filter bed" and "filter media" can be construed to require a multi-layered structure.

The '124 and '630 patents were previously interpreted by the United States District Court for the Eastern District of Virginia in an action brought by RFD against Infilco Degremont, Inc. ("IDI"), in which RFD alleged that IDI's ADVENT water treatment system literally infringed its '124 and '630 patents. The Virginia district court construed claim 1 of the '124 and '630 patents against RFD to require a multi-layered upflow filter. RFD and IDI subsequently settled the suit. RFD then brought an infringement suit against Pacific under the same patents in the Northern District of Alabama.

Pacific makes and sells water filtration equipment, including equipment named Key-Pac. There are two versions of Key-Pac. One version ("Version 1") has a filtration system that uses only a layer of sand as a filter. The other version ("Version 2") has a filtration system composed of sand that rests upon a support layer of gravel. Other than the differences in the filters, Versions 1 and 2 function similarly. That is, both versions utilize upflow and downflow filters to filter water. Both versions are accused of infringing both of RFD's patents.

The district court in Alabama held that the "filter bed" limitation in claim 1 of the '124 patent requires a multi-layered structure having flocculation, transitional, and filter layers. The court construed the independent claim to require the added layers of the dependent claims and of the preferred embodiment in the specification. In an analysis very similar to its analysis of the '124 patent, the court construed the term "first zone through first particulate filter media" in claim 1 of the '630 patent to require flocculation, transitional, and filter layers.

The court thus granted Pacific's motions for summary judgment and decided: (1) Pacific's Version 1 did not literally infringe either of the patents because it lacked flocculation and transition layers; (2) Version 2 did not literally infringe either patent because it lacked a transition layer; (3) Version 1 did not infringe under the doctrine of equivalents because a finding of equivalent infringement would allow the patent claims to encompass the prior art, and because finding infringement without the presence of a transition layer would violate the "all elements" rule; and (4) Version 2 did not infringe under the doctrine of equivalents either. The court also, with no explanation, granted Pacific's motion for summary judgment of noninfringement on the ground that it committed no act of infringement.

RFD appeals the district court's claim interpretation and its grant of summary judgment that use of Pacific's products did not infringe the method claims of the '124 or '630 patents and that Pacific did not commit any act of infringement.

DISCUSSION

Our review of a district court's grant of summary judgment of patent infringement or non-infringement is plenary. Cole v. Kimberly-Clark Corp., 102 F.3d 524, 528, 41 USPQ2d 1001, 1004 (Fed.Cir.1996). We review a district court's legal conclusions such as claim construction de novo. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456, 46 USPQ2d 1169, 1174 (Fed.Cir. 1998) (en banc).

I

A key issue of this case is whether the district court properly construed the claim terms "filter bed" of claim 1 of the '124 patent and "first particulate filter media" of claim 1 of the '630 patent as requiring a flocculation layer, a transitional layer, as well as a filter layer. Before we reach the proper claim construction, however, we first address Pacific's allegation that, regardless of the soundness of the Alabama district court's claim interpretation analysis, the trial court is bound by claim constructions in rulings on partial summary judgment from the Virginia district court in a case involving the same patents that ended in an extrajudicial settlement without complete adjudication even as to liability.¹

A

Pacific argues that RFD is bound by the claim constructions in orders issued by the Virginia district court ruling on motions for partial summary judgment in the infringement action brought by RFD against IDI. We conclude that collateral estoppel does not apply in the present case because no judgment, much less final judgment, was ever entered in the Virginia district court case.

As a purely procedural issue and in circumstances such as those presented here, the law of the regional circuit applies to the issue of collateral estoppel. Bayer AG. v. Biovail Corp., 279 F.3d 1340, 1345, 61 USPQ2d 1675, 1679 (Fed.Cir.2002). The party seeking to invoke collateral estoppel bears the burden to prove all necessary elements:

(1) the issue at stake must be identical to the one involved in the prior litigation; (2) the issue must have been actually litigated in the prior suit; (3) the determination of the issue in the prior litigation must have been a critical and necessary part of the judgment in that action; and (4) the party against whom the earlier decision is asserted must have had a full and fair opportunity to litigate the issue in the earlier proceeding.

In re McWhorter, 887 F.2d 1564, 1566 (11th Cir.1989) (citation omitted).

Judicial finality — the predicate for res judicata — arises only from a final decision rendered after the parties have been given a reasonable opportunity to litigate a claim before a court of competent jurisdiction. Thus, if the parties to a suit enter into an extrajudicial settlement or compromise, there is no judgment, and future litigation is not barred by res judicata or collateral estoppel though, of course, a court may dismiss litigation thereafter filed on...