Sundance, Inc. v. Demonte Fabricating Ltd.

• Decision Date: 24 December 2008
• Docket Number: No. 2008-1115.,No. 2008-1068.,2008-1068.,2008-1115.
• Citation: 550 F.3d 1356
• Parties: SUNDANCE, INC. and Merlot Tarpaulin and Sidekit Manufacturing Company, Inc., Plaintiffs-Cross Appellants, v. DEMONTE FABRICATING LTD. and Quickdraw Tarpaulin Systems, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

550 F.3d 1356

SUNDANCE, INC. and Merlot Tarpaulin and Sidekit Manufacturing Company, Inc., Plaintiffs-Cross Appellants, v. DEMONTE FABRICATING LTD. and Quickdraw Tarpaulin Systems, Inc., Defendants-Appellants.

No. 2008-1068.

No. 2008-1115.

United States Court of Appeals, Federal Circuit.

December 24, 2008.

Rehearing Denied January 22, 2009.

Thomas C. Wettach, Cohen & Grigsby, P.C., of Pittsburgh, PA, argued for plaintiffs-cross-appellants. Of counsel on the brief were Kevin J. Heinl and Robert C. Brandenburg, Brooks Kushman P.C., of Southfield, MI.

Richard L. Rainey, Covington & Burling LLP, of Washington, DC, argued for defendants-appellants. With him on the brief were Roderick R. McKelvie, Scott C. Weidenfeller, and Roger A. Ford.

Before DYK, PROST, and MOORE, Circuit Judges.

MOORE, Circuit Judge.

Plaintiffs-Cross Appellants Sundance, Inc. and Merlot Tarpaulin and Sidekit Manufacturing Co., Inc. (collectively, Sundance) sued Defendants-Appellants DeMonte Fabricating Ltd. and Quick Draw Tarpaulin Systems, Inc. (collectively, DeMonte) in the United States District Court for the Eastern District of Michigan for infringement of claim 1 of U.S. Patent No. 5,026,109 (the '109 patent). A jury concluded that claim 1 was infringed but invalid for obviousness under 35 U.S.C. § 103.

Following the jury verdict, Sundance moved for judgment as a matter of law (JMOL) that the '109 patent was not invalid. The court granted Sundance's motion, and denied DeMonte's motion asking for reconsideration in light of KSR International Co. v. Teleflex Inc., 550 U.S. 398, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007). DeMonte also moved for JMOL of noninfringement, which the court denied. DeMonte appeals both rulings. Sundance cross-appeals the district court's denial of prejudgment interest for infringing sales made prior to the date it filed suit. For the reasons set forth below, we reverse the district court's judgment that the asserted claims are nonobvious as a matter of law, thereby resolving all issues between the parties.

BACKGROUND

The '109 patent is directed to retractable segmented covering systems for "almost any structure or container," such as truck trailers, swimming pools, porches, and patios. '109 patent col.2 ll.35-43. Independent claim 1, the only asserted claim in this suit, reads as follows:

A retractable segmented cover system used with a truck trailer comprising a plurality of flexible cover sections with a plurality of substantially parallel supporting bows spaced there between and a drive assembly, wherein each cover section is detachably connected between substantially parallel supporting bows, the bows are slideably supported on the truck trailer and at least one bow is fixedly connected to the drive assembly such that the cover system can be extended or retracted by the drive assembly and wherein a cover section can be removed from the cover system independent of the other cover sections.

At trial, relevant to this appeal, DeMonte presented two prior art references to the jury as a basis for a determination of obviousness—U.S. Patent Nos. 4,189,178 (Cramaro) and 3,415,260 (Hall). Cramaro discloses a retractable tarpaulin cover system for use in trucks. The parties agree that the difference between the cover system disclosed in claim 1 of the '109 patent and the Cramaro cover system is that Cramaro does not include "segmented tarps." Sundance's Br. at 26. The parties further agree that Hall discloses a cover system divided into a number of "flexible screen members." Id. at 27. Hall indicates that its system "may be used as a truck cover." Hall col.6 l.48. Demonte's patent law expert, Daniel Bliss, opined that one of ordinary skill in the art would be motivated to combine Cramaro and Hall.¹ The jury determined that claim 1 of the '109 patent was obvious.

In a decision rendered before the Supreme Court's holding in KSR, the district court granted Sundance's motion for JMOL, ruling that "there was not sufficient evidence for the jury to conclude that one skilled in the art would have combined Hall and Cramaro so as to arrive at the invention—a segmented tarp used for truck covers." Sundance, Inc. v. DeMonte Fabricating Ltd., No. 02-73543, 2006 WL 2708541, at *5 (E.D.Mich. Sept. 20, 2006). In particular, the district court concluded that Hall was "prior art outside of the truck environment which used segmented tarps," "a segmented pool cover," and "a segmented non truck cover." Id. at *3-4.

In its ruling, the court also noted that Mr. Bliss "did not cite any references in either [Hall or Cramaro] to support his conclusion" that a person of ordinary skill in the art would have a motivation to combine the references. Id. at *5. Nor did the court find any "suggestion in the art to combine" Cramaro—which the court characterized as a truck cover—with Hall— which the court characterized as a non truck cover. Id. The court reasoned that its conclusion—that DeMonte failed to adduce sufficient evidence for the jury to conclude that one skilled in the art would have combined Hall and Cramaro—was "especially true in light of the fact that the level of skill in the art is low and focuses on tarps used for truck covers." Id. (emphasis added). The district court further stated that "secondary considerations ... support[] a finding of nonobviousness," including "long-felt but unresolved need" and "copying." Id. After the Supreme Court decided KSR, DeMonte moved for reconsideration, which the district court denied, stating that it had not rigidly applied the teaching, suggestion, and motivation test in its original analysis.

DeMonte has timely appealed, and Sundance has timely cross-appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

I.

We first consider the district court's admission of testimony from DeMonte's patent law expert, Mr. Bliss. Federal Rule of Evidence 702 provides that:

[i]f scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts.

Under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 597, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), and Rule 702, courts are charged with a "gatekeeping role," the objective of which is to ensure that expert testimony admitted into evidence is both reliable and relevant. See also Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) (holding that Rule 702 applies not only to "scientific" testimony, but to all expert testimony). Patent cases, like all other cases, are governed by Rule 702. There is, of course, no basis for carving out a special rule as to experts in patent cases.

We note that "[a]dmission of expert testimony is within the discretion of the trial court." Acoustical Design, Inc. v. Control Elecs. Co., 932 F.2d 939, 942 (Fed. Cir.1991) (citing Salem v. U.S. Lines Co., 370 U.S. 31, 35, 82 S.Ct. 1119, 8 L.Ed.2d 313 (1962)). We review the admission of expert testimony for an abuse of discretion. Id. (citing Seattle Box Co. v. Indus. Crating & Packing, Inc., 731 F.2d 818, 826 (Fed.Cir.1984)); see also Kumho Tire Co., 526 U.S. at 152, 119 S.Ct. 1167 ("[A] court of appeals is to apply an abuse-of-discretion standard when it reviews a trial court's decision to admit or exclude expert testimony.").

DeMonte submitted the expert report of Mr. Bliss to the district court, indicating that Mr. Bliss would opine on: USPTO practices and procedures (eight pages explaining prosecution and reexamination); claim construction (four pages interpreting the claim construction ruling); noninfringement (seven pages concluding that the claims of the '109 patent are not infringed); invalidity, including anticipation and obviousness (thirteen pages concluding that the claims of the '109 patent are invalid); and inequitable conduct (six pages concluding that the '109 patent is unenforceable due to inequitable conduct). Expert Report of Daniel H. Bliss (Docket No. 99-4, Mar. 28, 2006) (Report). Sundance objected, filing a motion in limine to preclude Mr. Bliss from testifying at trial. Sundance argued that Mr. Bliss "lacks appropriate technical background in the field of the invention." Sundance also argued that Mr. Bliss was not qualified to testify about "his interpretation of the law governing invalidity, infringement," or ultimate legal conclusions.

Opposing the motion, DeMonte argued that Mr. Bliss was qualified because he "is a patent attorney with extensive experience in patent law and procedure," and that his testimony was admissible because courts may allow patent law experts to testify on "general procedures involved in the patent application process," citing Bausch & Lomb, Inc. v. Alcon Laboratories, Inc., 79 F.Supp.2d 252, 254-55 (W.D.N.Y.2000). DeMonte further argued that Mr. Bliss's testimony should be admitted even though "Mr. Bliss may not have experience specifically with segmented tarpaulin systems" because his qualifications are "an appropriate subject for cross examination, but would go more to the weight to be given his testimony," citing Cameco Industries, Inc. v. Louisiana Cane Manufacturing, Inc., No. 92-3158, 1995 WL 468234, *3-4, 1995 U.S. Dist. LEXIS 11294, at * 10-11 (E.D.La. July 27, 1995). The district court denied the motion in limine without comment, thereby permitting Mr. Bliss to testify before the jury on all of the issues submitted in his expert report.

Although the motion in limine was denied in its entirety, Mr. Bliss did not actually testify as to all of the matters contained in his report. Mr. Bliss "was not asked to testify in general...