Union Carbide Chemicals & Plastics v. Shell Oil

• Decision Date: 03 October 2005
• Docket Number: No. 04-1475.,No. 04-1512.,04-1475.,04-1512.
• Parties: UNION CARBIDE CHEMICALS & PLASTICS TECHNOLOGY CORPORATION and UNION CARBIDE CORPORATION, Plaintiffs-Cross Appellants, v. SHELL OIL COMPANY, Shell Chemical Company, and Cri Catalyst Company, Defendants-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1366

425 F.3d 1366

UNION CARBIDE CHEMICALS & PLASTICS TECHNOLOGY CORPORATION and UNION CARBIDE CORPORATION, Plaintiffs-Cross Appellants, v. SHELL OIL COMPANY, Shell Chemical Company, and Cri Catalyst Company, Defendants-Appellants.

No. 04-1475.

No. 04-1512.

United States Court of Appeals, Federal Circuit.

October 3, 2005.

COPYRIGHT MATERIAL OMITTED

Harry J. Roper, Jenner & Block LLP, of Chicago, Illinois, argued for plaintiffs-cross appellants. With him on the brief were David R. Bennett, Aaron A. Barlow, and Raymond N. Nimrod; Paul M. Smith and Marc A. Goldman, of Washington, DC. Of counsel on the brief was Bruce M. Kanuch, The Dow Chemical Company, of Midland, Michigan.

William C. Slusser, Slusser Wilson & Partridge LLP, of Houston, Texas, argued for defendants-appellants. With him on the brief were Jayme Partridge and Jayne Piana. Of counsel on the brief were John D. Norris and Richard L. Stanley, Howrey LLP, of Houston, Texas. Of counsel were Laura F. Jones, Keith Jaasma and Michael E. Wilson, Slusser Wilson & Patridge LLP, of Houston, Texas.

Before MAYER, RADER, and PROST, Circuit Judges.

RADER, Circuit Judge.

The United States District Court for the District of Delaware granted final judgment to Union Carbide Chemicals & Plastics Technology Corporation and Union Carbide Corporation (collectively Union Carbide) after a jury found that Shell Oil Company, Shell Chemical Company, and CRI Catalyst Company (collectively Shell) infringed claim 4 of Union Carbide's U.S. Patent No. 4,916,243 (the '243 patent). Union Carbide Chems. & Plastics Tech Corp. v. Shell Oil Co., No. Civ. 99-CV-274-SLR, Civ. 99-846-SLR, 2004 WL 1305849 (D.Del. June 9, 2004) (Union Carbide III). Because substantial evidence supports the jury verdict, this court affirms that finding. However, because the district court improperly excluded Shell's exportation of catalysts in its damages calculation, this court vacates the damage award and remands.

I.

In 1999, Shell filed a declaratory judgment action in the United States District Court for the Southern District of Texas alleging that Union Carbide's U.S. Patent No. 5,057,481 (the '481 patent), U.S. Patent No. 4,908,343 (the '343 patent), and the '243 patent were invalid, unenforceable, and not infringed. One month later, Union Carbide sued Shell in the United States District Court for the District of Delaware alleging that six of Shell's catalysts infringed those same patents. Union Carbide Chems. & Platics Tech. Corp. v. Shell Oil Co., 163 F.Supp.2d 426, 430 (D.Del.2001) (Union Carbide I). The two cases were consolidated for trial in Delaware. After a twelve day trial, a jury returned a verdict for Shell on issues of infringement and invalidity. Id. Upon appeal, this court affirmed-in-part, reversed-in-part, and remanded. Union Carbide Chems. & Plastics Tech. Corp. v. Shell Oil Co., 308 F.3d 1167 (Fed.Cir.2002) (Union Carbide II).

In 2003, the district court held a second jury trial on the remanded issues involving only the '243 patent. Union Carbide III, 2004 WL 1305849, at *1. The jury returned a verdict finding that Shell's S-880 and S-882 catalysts directly infringed claim 4 in the production of ethylene oxide (EO). The jury also found that Shell contributorily infringed claim 4 by selling its S-863, S-880 and S-882 catalysts to third parties. Id. Accordingly, the jury awarded $112,198,893 in damages to Union Carbide. The trial court first adjusted that award to $111,212,665 after correcting for a clerical error and later to $153,615,774 for prejudgment interest. Id. at *1, *15 n. 19, *20, *22. This damages award, however, did not account for Shell's exportation of catalysts because the district court ruled in limine that 35 U.S.C. § 271(f) damages are not available for process claims, such as claim 4 of the '243 patent. After considering post-trial motions from both parties, the district court entered a final judgment for Union Carbide and a permanent injunction against Shell, which it stayed pending Shell's appeal to this court. Id. at *22.

Shell appeals the district court's denial of its Judgment as a Matter of Law (JMOL) motions and the damages amount. Union Carbide cross-appeals the district court's holding that 35 U.S.C. § 271(f) does not apply to process claims and the jury verdict finding that Shell's infringement was not willful. This court has jurisdiction under 28 U.S.C. § 1295(a)(1) (2000).

II.

This court described the technology at issue in this case at length in Union Carbide II. See Union Carbide II, 308 F.3d at 1171-73. The district court also explained the technology very well in Union Carbide III. Union Carbide III, 2004 WL 1305849, at *2. In brief, the '243 patent claims improved silver catalysts for the commercial production of EO. Union Carbide III, 2004 WL 1305849, at *2. EO gas is used primarily in the industrial production of ethylene glycol, which is used, in turn, to produce polyester fiber, resin and film. Id. Most of the EO produced each year is converted into monoethylene glycol (MEG). Union Carbide and its parent corporation, Dow Chemical, produce twenty-five percent of the MEG sold domestically. Id. at *2 n. 3. Shell is a direct competitor of Union Carbide and Dow Chemical in EO production and MEG sales.

Union Carbide's proprietary process for EO production involves a highly exothermic reaction between ethylene and oxygen occurring between 250 — 300 C. '243 patent, col. 12, l. 50-col. 13, l. 30. Before 1971, the ordinary artisan in this field understood that a silver catalyst decreased the reaction temperature and increased reaction efficiency without consuming or altering the silver itself. Id. at *2. However, no producer managed to increase the reaction efficiency beyond 65 percent. Id. In 1971, scientists discovered that certain alkali metals in small amounts further promoted the efficiency of silver-catalyzed reactions. Id. Union Carbide thus undertook considerable research on catalysts with silver and other alkali metals. This research led to the invention now claimed in the '243 patent.

The '243 patent claims a process for the production of EO with a greater decrease in the reaction temperature than processes using pure silver catalysts. Thus, this new process reduces the formation of oxygen and water byproducts and increases the efficiency of the reaction. '243 patent, col. 8, ll. 39-55. Claim 4, the sole claim at issue in the present appeal, concerns a process involving a catalyst including silver, cesium and lithium. Claim 4 of the '243 patent reads:

4. The process of claim 1 wherein said alkali metal is lithium.

1. In the continuous process for the production of ethylene oxide by the vapor phase oxidation of ethylene with molecular oxygen provided as an oxygen-containing gas at a temperature of from about 200 C. to 300 C. in the presence of at least about one mole percent of carbon dioxide and an organic chloride in the gaseous feed stream and in the presence of a supported, silver-containing catalyst in a fixed bed, tubular reactor used in commercial operations to form ethylene oxide, wherein said supported, silver-containing catalyst contains 2 to 20 weight percent silver deposited on a support which is in a form and size for use in the reactor, wherein (i) the specific reaction conditions of the ethylene oxide process; (ii) the specific catalyst support characteristics and (iii) the specific silver deposition method comprise an ethylene oxide production system, the improvement in which the catalyst comprises silver deposited on an alpha-alumina macroporous support in a first amount having a surface area less than 10 m²/g and contains a combination of (a) cesium in a second amount and (b) at least one other alkali metal selected from the group consisting of lithium, sodium, potassium and rubidium in a third amount, which combination comprises (a) and (b) in amounts in relation to the amount of silver in the catalyst sufficient to provide an efficiency of ethylene oxide manufacture that is greater than the efficiencies obtainable in the same ethylene oxide production system, including the same conversions, than (i) a second catalyst containing silver in the first amount and cesium in the second amount, and (ii) a third catalyst containing silver in the first amount and the alkali metal in the third amount, wherein the combination of silver, cesium and alkali metal in said catalyst is characterizable by an efficiency equation:

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

where

BA₁ =BRb,

BA₂ =BK,

BA₃ =BNa,

BA₄ =BL_i%[sic], and where the coefficient b₀ through b₉j and BG, BRb, BK, BNa, BLi and BCs are determined from a composite design set of experiments using the same ethylene oxide production system for the independent variables silver, cesium and alkali metal, and wherein BG is the difference of the average value of the silver content from the silver content used in the design set, BCs is the difference of the average value of the cesium content from the cesium content used in the design set, BRb is the difference of the average value of the rubidium content from the rubidium content used in the design set, BK is the difference of the average value of the potassium content from the potassium content used in the design set, BNa is the difference of the average value of the sodium content from the sodium content used in the design set and BLi is the difference of the average value of the lithium content from the lithium content used in the design set.

'243 patent, col. 29, l. 53-col. 30, l. 61. (emphasis added). Claim 4, as construed by the district court, contains four limitations:

(1) an EO process operated at specific reaction conditions; (2) the catalyst used in the EO process comprises silver in a first amount, cesium in a second amount, and lithium in a third amount; (3) the efficiency obtainable from the EO process using the catalyst is greater than the efficiency of a process using (a)...