Spindelfabrik Suessen-Schurr, Stahlecker & Grill GmbH v. Schubert & Salzer Maschinenfabrik Aktiengesellschaft

• Decision Date: 09 September 1987
• Docket Number: Nos. 86-561,86-682,SUESSEN-SCHURR,s. 86-561
• Citation: 829 F.2d 1075,4 USPQ2d 1044
• Parties: , 4 U.S.P.Q.2d 1044 SPINDELFABRIKSTAHLECKER & GRILL GmbH, et al., Appellees, v. SCHUBERT & SALZER MASCHINENFABRIK AKTIENGESELLSCHAFT and Schubert & Salzer Machine Works, Inc., Appellants. Appeal
• Court: U.S. Court of Appeals — Federal Circuit

Page 1075

829 F.2d 1075

56 USLW 2176, 4 U.S.P.Q.2d 1044

SPINDELFABRIK SUESSEN-SCHURR STAHLECKER & GRILL GmbH, et

al., Appellees, v. SCHUBERT & SALZER MASCHINENFABRIK AKTIENGESELLSCHAFT and Schubert & Salzer Machine Works, Inc., Appellants.

Appeal Nos. 86-561, 86-682.

United States Court of Appeals, Federal Circuit.

Sept. 9, 1987.

James F. Davis, Howrey & Simon, Washington, D.C., argued for appellants. With him on the brief were Alan M. Grimaldi and Barbara A. Friedman. Also on the brief were Julian W. Dority and Wellington M. Manning, Dority & Manning, Greenville, S.C.

Charles B. Park, III, Bell, Seltzer, Park & Gibson, Charlotte, N.C., argued for appellees. With him on the brief were Michael D. McCoy, Kenneth D. Sibley and Dickson M. Lupo. Also on the brief was Fletcher C. Mann, Sr., Leatherwood, Walker, Todd & Mann, Greenville, S.C.

Before BALDWIN ^* and SKELTON, Senior Circuit Judges, and ARCHER, Circuit Judge.

BALDWIN, Senior Circuit Judge.

This is a consolidation of appeals from two judgments of the United States District Court for the District of South Carolina (district court) (1) declaring U.S. Patent No. 4,059,946 (the '946 patent) and U.S. Patent No. 4,175,370 (the '370 patent) valid and infringed and awarding increased damages and attorney fees based on a finding of willful infringement of the '946 patent and (2) granting a motion to enjoin subsequent infringement by a redesign of the accused device. Appeal was taken on four questions related to the district court's infringement determinations. We affirm the district court's decision with respect to each of the four questions on infringement.

Background

In 1983, the three appellees in this appeal, Hans Stahlecker, Fritz Stahlecker, and Spindelfabrik Suessen-Schurr, Stahlecker and Grill GmbH (collectively and individually "Suessen"), brought an action in the district court for infringement of two patents ¹ relating to improvements in the technology of open-end spinning devices, the '946 patent and the '370 patent. It was charged that an open-end spinning device, the Spincomat, produced and marketed by appellants, Schubert and Salzer Maschinenfabrik Aktiengesellschaft and Schubert and Salzer Machine Works, Inc. (collectively and individually "Schubert"), ² infringes claim 18 of the '946 patent and infringes claims 1-7, 9-13, and 17-20 of the '370 patent. The district court rejected the Schubert defenses of invalidity, unenforceability, non-infringement, and implied license, and on September 4, 1985, issued its "Order and Opinion Including Findings of Fact and Conclusions of Law" declaring the '946 and '370 patents valid and infringed. The district court awarded increased damages based on willful and deliberate infringement and attorney fees under 35 U.S.C. Sec. 285 (1982) for infringement attributable to the '946 patent.

Six weeks later, on October 28, 1985, the district court issued an order declaring that, despite Schubert's efforts to produce a non-infringing modification, the redesigned version of the Spincomat also infringes the '946 patent.

A. Standard of Review

We review the four questions raised on appeal, each related to the district court's infringement determinations: (1) whether the district court properly rejected an implied license defense to infringement of the '946 patent; (2) whether there is clear error in the finding of infringement of the '946 patent by the redesigned Spincomat; (3) whether there is clear error in the finding of infringement of the '370 patent by the Spincomat; and (4) whether there is error or an abuse of discretion in the award of increased damages and attorney fees. ³

In conducting our review, we have the benefit of the district court's order. Its factual findings are to be reversed only if clearly erroneous. Fed.R.Civ.P. 52(a). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985); United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948). ⁴ "This standard plainly does not entitle a reviewing court to reverse the finding of the trier of fact simply because it is convinced that it would have decided the case differently." Anderson, 470 U.S. at 574, 105 S.Ct. at 1512.

Where the issue before us is a question of law, our review is based on whether the district court erred as matter of law. Bandag, Inc. v. Gerrard Tire Co., 704 F.2d 1578, 217 USPQ 977 (Fed.Cir.1983); Deere & Co. v. Int'l Harvester Co., 710 F.2d 1551, 218 USPQ 481 (Fed.Cir.1983).

B. The Technology

The '946 and '370 patents are directed to the automation of open-end spinning (OES), a technology whereby uniformly twisted yarn is produced from irregular strands of fiber. The findings of the district court regarding OES technology and operation of an OES device are not contested.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Above is a diagram of the principal elements of an OES device. Open-end spinning is performed on such a device in a sequence of steps. First, a mass of irregular strands of fiber is fed into the device on a feed roll. The feed roll, in turn, feeds fiber into a high speed, rotating, toothed comber where the fibers are separated into individual strands. The individual strands are then vacuum drawn into a rotor which is cup-shaped with an annular groove. A twist is imparted to the strands while they are under the centrifugal force of the high speed rotor. Once twisted, the strands become the final product, spun yarn. The yarn is pulled from the rotor through a withdrawal tube and wound onto a spool.

The '370 and '946 patents relate to a portion of the OES operation denoted as the "piecing point." As the yarn is withdrawn from the rotor, pulled by a pair of "take off" rolls and wound onto a spool, it is subject to breakage. Breakage inherently results in discontinuity in the operation, requiring reconnection and restarting of the operation. Automation of an OES device involves the implementation of a sequence of automatic steps to restart the device by cleaning out broken fiber, feeding new fiber into the rotor and reconnecting the newly spun yarn. The points of reconnection after breakage are denoted as "piecing points." Both of the patents in issue disclose improvements which avoid time lapse for reconnection and minimize nonuniformities in the yarn at the piecing points.

I. Infringement of the '946 Patent

The '946 patent, entitled "Method and Apparatus for Start Spinning a Thread on Open-End Spinning Units" issued on November 29, 1977 to Dieter Boettcher, Heinze Schulz and Fritz Stahlecker. Hans and Fritz Stahlecker were subsequently assigned the patent, and they licensed Suessen as an exclusive licensee.

The '946 patent addresses the absence in the prior art of a method and apparatus for providing precise control of fiber feed during piecing. Claim 18 ⁵ recites an apparatus for performing a controlled sequence of steps for automated restart of the spinning operation, including preparation of the rotor.

The district court found that claim 18 of the '946 patent reads directly on Schubert's OES device, the Spincomat. ⁶ In making this finding, the court identified an aspect of the Spincomat which corresponds to each of the elements recited in claim 18. Literal reading of the '946 patent upon Schubert's Spincomat is not contested in this appeal.

A. The Implied License Defense

Schubert argues that it has an implied license under the '946 patent. Its argument involves two agreements.

The first was a license agreement entered in 1982 between Schubert and Murata Machinery, Ltd. (Murata). That agreement, entered into before the filing of this suit in 1983, in pertinent part reads:

Murata hereby grants to Licensee [Schubert] a non-exclusive worldwide license under the Patents to make, use and sell the patented device only as part of the open end spinning machines of the License. The License hereby granted is a limited license, and Murata reserves all rights not expressly granted.

The "Patents" were defined by the agreement as those listed in an Exhibit. They include U.S. Patent No. 4,022,011 ('011 patent) and other patents belonging to Murata in the name of Hironorai Hirai. Schubert asserts that, notwithstanding any infringement of '946, its accused infringement is merely a practicing of the '011 invention, which it is licensed to do under the 1982 agreement.

The second agreement, entered in 1984 after this lawsuit began, involved Suessen's purchase of the '011 and other Hirai patents from Murata. The agreement reads, in pertinent part:

Suessen has been advised by Murata that a non-exclusive license of the patents and patent applications mentioned under 1. above had been granted by Murata to Messrs. Schubert & Salzer AG, Ingolstadt, F.R. Germany (hereinafter called the Licensee). Suessen hereby agrees to purchase the patents and patent applications mentioned under 1. above together with the License Agreement as of 23rd/28th July, 1982, with the said Licensee and agrees that you and your business/license concerns will maintain the licensed rights of the Licensee under the License Agreement as stipulated during the life of the patents and patent applications mentioned under 1. above. ⁷

Schubert asserts that, per the 1984 agreement, Suessen "stepped in the shoes of Murata" and by so "stepping," Suessen cannot--just as Murata cannot--sue under the '946 or any other patent for infringement based on practicing the '011 invention. To allow such a suit, Schubert argues, would unfairly take away what it paid for in 1982. Schubert labels its argument one of "legal estoppel."

The district court concluded that Schubert in 1982 could not have acquired from Murata any rights greater than those which Murata had the...