Woodrow Woods & Marine Exhaust Sys., Inc. v. Deangelo Marine Exhaust, Inc.

• Decision Date: 28 August 2012
• Docket Number: No. 2010–1478.,2010–1478.
• Citation: 104 U.S.P.Q.2d 1169,692 F.3d 1272
• Parties: Woodrow WOODS and Marine Exhaust Systems, Inc., Plaintiffs–Appellees, v. DeANGELO MARINE EXHAUST, INC., Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

692 F.3d 1272

104 U.S.P.Q.2d 1169

Woodrow WOODS and Marine Exhaust Systems, Inc., Plaintiffs–Appellees,

v.DeANGELO MARINE EXHAUST, INC., Defendant–Appellant.

No. 2010–1478.

United States Court of Appeals,Federal Circuit.

Aug. 28, 2012.

Denise J. Bleau, Ward, Damon, Posner, Pheterson & Bleau, PL, of West Palm Beach, FL, argued for plaintiffs-appellees. Of counsel was Mark D. Bowen, Malin Haley DiMaggio Bowen & Lhota, P.A., of Fort Lauderdale, FL.

Michael C. Cesarano, Feldman Gale, P.A., of Miami, FL, argued for defendant-appellant. With him on the brief was Richard Guerra.

Before LINN, DYK, and REYNA, Circuit Judges.

LINN, Circuit Judge.

DeAngelo Marine Exhaust, Inc. (“DeAngelo”) appeals from the denial by the United States District Court for the Southern District of Florida of DeAngelo's motion for judgment as a matter of law (“JMOL”) as to invalidity and infringement of U.S. Patents No. 5,740,670 (“'670 Patent”) and No. 6,035,633 (“'633 Patent”) owned by Woodrow Woods (“Woods”) and exclusively licensed to Marine Exhaust Systems, Inc. (“MES”) following a jury verdict in MES's favor. DeAngelo also appeals the district court's evidentiary ruling and claim construction underlying the jury verdict and the denial of DeAngelo's motion to sanction MES for failing to conduct an adequate pre-filing investigation. For the reasons set forth below, this court affirms.

I. Background

A. The Patents in Suit

Water jacketed marine exhaust systems cool exhaust as it exits the engine of a marine vessel. These devices generally consist of two metal cylinders with exhaust flowing through the inner cylinder and water flowing through the space between the inner and outer cylinders. The patents in suit are directed to an apparatus that more efficiently cools exhaust by tapering the tail end of the outer liner so it directs the cooling water into the exhaust stream, and prevents water migration and corrosion by tapering the tail end of the inner liner to reduce the turbulence at the end of the pipe.

Woods filed U.S. Patent Application No. 08/419,097 (“'097 Application”) on April 10, 1995. The '097 Application disclosed and claimed: (1) a water jacketed exhaust system with an elongated, tapered, inner liner and outer shell; (2) a spacer separating the liner and shell; and (3) the inner and outer tapered surfaces acting as a clip for turbulence and a deflection surface respectively.See, e.g., '097 Application claim 1. On December 29, 1995, Woods filed U.S. Patent Application No. 08/580,548 (“'548 Application”) as a continuation-in-part (“CIP”) of the '097 Application. The ' 548 Application's claims were broader than the '097 Application's claims. For example, claim 1 of the '548 Application required extension of the inner liner beyond the outer shell, but did not limit the tapered surfaces to deflecting water and clipping turbulence. Compare '097 Application claim 1, with '548 Application claim 1.

On July 1, 1996, an examiner rejected all claims of the '097 Application as anticipated by U.S. Patents No. 5,212,949 (“Shiozawa”) and No. 799,013 (“Moffitt”). Instead of responding to the '097 anticipation rejection, Woods allowed the '097 Application to go abandoned and continued to prosecute the CIP '548 Application. On April 25, 1997, the same examiner who had rejected the '097 Application allowed several of the claims in the '548 Application. On April 21, 1998, the '548 Application issued as the '670 Patent.

On December 15, 1997, before the '548 Application had matured into the '670 Patent, Woods filed CIP application No. 08/990,821 (“'821 Application”). The invention claimed in the '821 Application was similar to that of the '548 Application, but was not limited to an elongated inner liner extending beyond the outer shell. On April 1, 1999, the examiner rejected claims 1–4, 6, and 8–21 of the '821 Application as anticipated by U.S. Patent No. 4,977,741 (“Lulloff”). Woods amended the claims by reciting a spacer between the inner and outer cylinders that created a back pressure so that water forcefully sprayed out of a spray ring. Woods argued that Lulloff did not contain this limitation and that the amended claims were not anticipated. Woods never argued that the claims were or were not patentable as initially written. The examiner allowed the amended claims, and the '821 Application issued as the ' 633 Patent on March 14, 2000. Woods exclusively licensed both the '670 and '633 Patents to MES.

B. Pre–Suit Investigation

MES competes with DeAngelo in the marine exhaust system market. Sometime prior to March 2006, other members of the industry informed MES that DeAngelo was selling exhaust systems that were believed to infringe the Woods patents. Based on these statements, on March 10, 2006, MES wrote a letter to DeAngelo requesting information on its water cooled products. DeAngelo indicated in an April 3, 2006 response that it would investigate MES's infringement concerns and contact MES. DeAngelo never contacted MES after sending its initial April 3, 2006 letter. Over a year later one of MES's employees photographed an allegedly infringing DeAngelo device on a vessel in West Palm Beach, FL. A year after that, Sheila Prieschl, Vice President of MES, personally inspected and photographed additional DeAngelo devices. On December 31, 2008, after reviewing these photographs, MES and Woods filed this patent infringement suit in the United States District Court for the Southern District of Florida.

C. The Proceedings Below

Woods's suit alleged that DeAngelo infringed one or more claims of the '670 or '633 Patents and sought both damages and injunctive relief. DeAngelo responded that it did not infringe the Woods patents and that the asserted claims are invalid as obvious under 35 U.S.C. § 103. The case moved forward with discovery set to close on February 9, 2010.

From the record it appears that on May 15, 2009, MES propounded Interrogatory 25, which read: “State with specificity all prior art that anticipates such claims of one or more of the patents at issue or renders them obvious. In doing so, specify the particular claim being referred to and identify why such prior art anticipates such claims or renders them obvious.” Pl's Mot. to Strike and/or Exclude Evidence of Prior Art not Disclosed in Disc, Ex. A, Woods v. DeAngelo Marine Exhaust, Inc., No. 08–cv–81579 (S.D.Fla. Apr. 11, 2010), ECF No. 177–1 (“Mot. to Strike Drawings”). It appears that DeAngelo timely responded in mid-June that “[the] interrogatory seeks attorney work-product information, and is not discoverable. DeAngelo has not yet decided which prior art references it will use to challenge the validity of the patents in suit ... [they] shall be disclosed as required by 35 U.S.C. § 282.” Id.

On February 8, 2010, the day before discovery closed, DeAngelo located several engineering drawings that allegedly predated the '670 and '633 Patents. DeAngelo immediately forwarded the drawings to MES with a letter stating that “[t]hese documents arguably may anticipate the Woods invention(s), or may be relied upon as showing the state of the art in the early 1990's.” E-mail from Michael C. Cesarano, counsel for DeAngelo, to Jennifer Simpson, counsel for MES (Feb. 8, 2010) (J.A. 293) (“Disclosure E-mail”). DeAngelo's letter questioned “whether [MES] would object to [DeAngelo's] use of [the newly discovered drawings] if trial should begin before March 10,” because DeAngelo's disclosure would then violate 35 U.S.C. § 282. Id. It appears that MES did not object at that time. Oral Arg. at 17:10–18:25, available at http:// www. cafc. uscourts. gov/ oral- argument- recordings/ all/ woods. html. On February 12, 2010, the parties submitted their joint pretrial stipulation and included their exhibit and witness lists. DeAngelo's exhibit list included Exhibit 38: “Prior art drawings of DeAngelo Marine Exhaust risers and diffusers.” Def.'s Ex. and Witness List, Woods v. DeAngelo Marine Exhaust, Inc., No. 08–cv–81579 (S.D.Fla. Feb. 12, 2010), ECF No. 105–2. These were the drawings found on February 8, 2010. On February 24, 2010, DeAngelo alleged that MES and Woods failed to conduct an adequate pre-filing investigation and moved for sanctions under Rule 11 of the Federal Rules of Civil Procedure.

A two-week jury trial commenced on April 5, 2010. At the beginning of DeAngelo's defense, MES moved under Federal Rules of Civil Procedure 26 and 37 to strike the drawings DeAngelo had found on February 8, 2010. See Mot. to Strike Drawings. MES argued that because DeAngelo had failed to adequately supplement Interrogatory 25 with information about these drawings, they were not properly identified prior to the close of discovery and should be excluded. The district court found a violation of Rule 26(e), ruling that:

a party confronted with interrogatory [sic] of that nature has some obligation to move forward with the development of its defense and in a timely fashion to respond and supplement to its answer.... [T]o wait to do that until February 8th of 2010 is not responsible.... [T]his is not a timely response and it is not a timely supplement to the propounded interrogatory. It is not a timely supplement to the answer that was [originally] given ... its timing is way off, it should have done that much earlier.

Tr. of Prior Art Argument at 23–25, Woods v. DeAngelo Marine Exhaust, Inc., No. 08–cv–81579 (S.D.Fla. Sept. 12, 2010), ECF No. 284 (“Prior Art Argument”) (emphasis added) (paragraph structure not indicated). The court then found DeAngelo's untimely disclosure neither justified nor harmless and excluded the drawings pursuant to Federal Rule of Civil Procedure 37(c)(1). The jury found Woods's patents valid and infringed and DeAngelo renewed its motions for JMOL on validity and infringement. On June 3, 2010, the court denied DeAngelo's motions for JMOL and for sanctions against Woods and MES. DeAngelo timely appealed and alleges five errors by the district court: (1) the exclusion of its...