Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc.

• Decision Date: 15 November 2012
• Docket Number: No. 2011–1555.,2011–1555.
• Citation: 699 F.3d 1340
• Parties: TRANSOCEAN OFFSHORE DEEPWATER DRILLING, INC., Plaintiff–Appellant, v. MAERSK DRILLING USA, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

699 F.3d 1340

TRANSOCEAN OFFSHORE DEEPWATER DRILLING, INC., Plaintiff–Appellant,

v.MAERSK DRILLING USA, INC., Defendant–Appellee.

No. 2011–1555.

United States Court of Appeals, Federal Circuit.

Nov. 15, 2012.

Charles B. Walker, Jr., Fulbright & Jaworski L.L.P., of Houston, TX, argued for plaintiff-appellant. With him on the brief was Warren S. Huang. Of counsel on the brief was Jonathan S. Franklin, of Washington, DC.

William H. Frankel, Brinks Hofer Gilson & Lione, of Chicago, IL, argued for defendant-appellee. With him on the brief were Roy E. Hofer, David H. Bluestone, David P. Lindner, and Laura A. Lydigsen. Of counsel on the brief was Lee L. Kaplan, Smyser Kaplan & Veselka, L.L.P., of Houston, TX.

Before PROST, MOORE, and WALLACH, Circuit Judges.

MOORE, Circuit Judge.

Transocean Offshore Deepwater Drilling, Inc. (Transocean) appeals from the decision of the U.S. District Court for the Southern District of Texas granting judgment as a matter of law (JMOL) that (1) the asserted claims of U.S. Patent Nos. 6,047,781 ('781 patent), 6,085,851 ('851 patent), and 6,068,069 ('069 patent) are invalid for obviousness and lack of enablement; (2) Maersk Drilling USA, Inc. (Maersk) did not infringe the asserted claims; and (3) Transocean was not entitled to damages. Transocean also appeals from the district court's conditional grant of a new trial. For the reasons set forth below, we reverse.

Background

The patents-in-suit, which share a common specification, are directed to an improved apparatus for conducting offshore drilling. We described the process of offshore drilling in detail in our opinion resolving the first appeal in this case, and repeat this description only to the extent necessary for this appeal. See Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F.3d 1296, 1301 (Fed.Cir.2010)( Transocean I ).

The process of creating a borehole in the seafloor requires lowering several components to the seabed from a derrick on the ocean surface. Id. These include the drill bit, the casings that form the wall of the borehole, and a device called a blowout preventer. Id. The components are lowered on a “drill string,” which is made up of a series of pipe sections (“tubular members”). Id. The drill string is assembled on the derrick, with pipe sections being added to the top of the string one by one to extend it to the seafloor. Id.

The drill bit is the first component to be lowered. Id. Once enough pipe sections have been added to the drill string to lower the drill bit to the seabed, a “top drive” on the derrick rotates the drill string to create a borehole. Id. Additional pipe sections are added to the drill string as the bit drills deeper into the seabed. Id. Once the drill creates a portion of the borehole, the derrick retracts the drill bit to the surface, removing each section of the drill string piece by piece. Id. A section of casing is then lowered into the borehole, with the drill string again being constructed on the derrick, one pipe section at a time. Id. The next step is lowering the blowout preventer to the seabed, again with the drill string being assembled piece by piece. The process of drilling and lowering casing into the borehole then repeats until the hole is the desired depth. Id. Each time a component is lowered to the seafloor, a drill string must be assembled and disassembled.

Conventional drilling rigs use a derrick with a single drawworks and thus can only raise or lower one component at a time. Id. Transocean sought to improve the efficiency of this time-consuming process using the “dual-activity” drilling apparatus disclosed in the patents-in-suit. The patents recite a derrick with both a main and an auxiliary advancing station, each of which can separately assemble drill strings and lower components to the seafloor. See, e.g., '781 patent col.3 ll.27–32, 58–67, col.7 ll.22–64. Each advancing station has a drawworks for raising and lowering the drill string and a top drive for rotating the drill string. Id. col.8 ll.16–24. While the auxiliary advancing station drills and cases the first portion of the borehole, the main advancing station lowers the blowout preventer. Id. col.8 ll.66–col.9 l.2, col.9 ll.21–23. The auxiliary advancing station then retracts the drill string and supports the main advancing station by preparing lengths of drill string in advance. Id. col.9 ll.25–30. Transocean's patents disclose a pipe handling system, also called a transfer assembly, which allows the transfer of casing, drill string, and other components between the two advancing stations and from the advancing stations to storage areas. Id. col.7 ll.22–64.

Transocean asserted claims 10–13 and 30 of the '781 patent, claim 10 of the '851 patent, and claim 17 of the '069 patent against Maersk. Transocean alleged that Maersk infringed the claims by entering into a contract with Statoil Gulf of Mexico LLC (Statoil), which granted Statoil the right to use an allegedly infringing drilling rig. Transocean I, 617 F.3d at 1307. In Transocean I, the district court granted Maersk's motion for summary judgment of obviousness, concluding that the asserted claims would have been obvious over the combination of two prior art references: U.K. patent application GB 2 041 836 (Horn) and U.S. Patent No. 4,850,439 (Lund). Id. at 1303. The district court also granted Maersk's motion for summary judgment that the asserted claims were not enabled because the specification does not adequately describe the claim limitations relating to the pipe transfer assembly. Id. at 1305–06. Finally, the court granted summary judgment of noninfringement in favor of Maersk. Id. at 1307–08.

On appeal, we vacated the district court's grant of summary judgment of noninfringement and reversed its grant of summary judgment of invalidity for obviousness and lack of enablement. Transocean I, 617 F.3d 1296. On remand, a jury found that Maersk failed to prove that the asserted claims would have been obvious or that they were not enabled.¹ The jury made specific findings that the prior art failed to disclose every element of the asserted claims and that each of seven objective factors indicated nonobviousness. The jury also found that Maersk infringed and awarded $15 million in compensatory damages. The district court, however, granted Maersk's motions for judgment as a matter of law (JMOL) that the asserted claims are invalid as obvious and not enabled, that Maersk did not infringe, and that Transocean is not entitled to damages. The court also conditionally granted Maersk's motion for a new trial under Federal Rule of Civil Procedure 59. Transocean now appeals from these rulings. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

Discussion

We review a district court's grant or denial of JMOL under the law of the regional circuit. ACCO Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1311 (Fed.Cir.2007) (citation omitted). The Fifth Circuit reviews the grant or denial of JMOL de novo. Med. Care Am., Inc. v. Nat'l Union Fire Ins. Co., 341 F.3d 415, 420 (5th Cir.2003). JMOL is appropriate only if “the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict.” Id. (quotation omitted). We have interpreted the Fifth Circuit's JMOL standard to mean that the jury's determination must be supported by substantial evidence. ACCO Brands, 501 F.3d at 1312. Substantial evidence is “such evidence as a reasonable mind might accept as adequate to support a conclusion.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938). In determining whether a jury's finding is supported by substantial evidence, “we must presume that the jury resolved all factual disputes in favor of the prevailing party.” Cordis Corp. v. Boston Scientific Corp., 658 F.3d 1347, 1357 (Fed.Cir.2011) (quoting Akamai Techs., Inc. v. Cable & Wireless Internet Servs., Inc., 344 F.3d 1186, 1192 (Fed.Cir.2003)).

I. Obviousness

A patent is invalid as obvious “if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains.” 35 U.S.C. § 103(a). Obviousness is a question of law with several underlying factual inquiries: (1) the scope and content of the prior art; (2) the differences between the prior art and the claims at issue; (3) the level of ordinary skill in the field of the invention; and (4) objective considerations such as commercial success, long felt but unsolved need, and the failure of others. Graham v. John Deere Co. of Kan. City, 383 U.S. 1, 17–18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966); see also KSR Int'l Co. v. Teleflex, Inc., 550 U.S. 398, 406, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007). Patent invalidity must be established by clear and convincing evidence. Microsoft Corp. v. i4i Ltd., ––– U.S. ––––, 131 S.Ct. 2238, 2242, 180 L.Ed.2d 131 (2011).

A. Prima Facie Case

As an initial matter, Maersk argues that our opinion in Transocean I establishes that, as law of the case, the Horn and Lund references make out a prima facie case of obviousness. Maersk thus contends that the district court erred on remand by allowing the jury to consider whether Horn and Lund teach every limitation of the asserted claims. Transocean counters that, because it presented objective evidence of nonobviousness, the district court was required to let the jury decide all the factual questions underlying the obviousness inquiry, including whether the prior art discloses every limitation of the asserted claims.

Under the law of the case doctrine, a court adheres to its decision in a prior appeal absent exceptional circumstances. See, e.g., Ormco Corp. v. Align Tech., Inc., 498 F.3d 1307, 1319 (Fed.Cir.2007). This doctrine “is limited to issues...