Thursday, May 23, 2013

CAFC in Douglas vs. Buyers, handling injunctions between non-direct competitors : the image of a Ford as a -- “Mercedes at half the price.”--

The case of Douglas v. Buyers involving snowplow makers,
has imagery directed to carmakers.

A summary of the events:

Douglas Dynamics, LLC (Douglas) sued Buyers Products
Co. (Buyers) for infringement of several patents
related to snowplow mounting assemblies. The United
States District Court for the Western District of Wisconsin
granted summary judgment of non-infringement of
U.S. Patent No. Re. 35,700 (’700 Patent) in favor of Buyers.
Douglas Dynamics, LLC v. Buyers Prods. Co., 747 F.
Supp. 2d 1063 (W.D. Wis. 2010). Following a jury verdict
that found U.S. Patent No. 5,353,530 (’530 Patent) and
U.S. Patent No. 6,944,978 (’978 Patent) valid and infringed,
the district court denied Douglas a permanent
injunction and assigned an ongoing royalty. Because the
district court applied an erroneous claim construction in
granting summary judgment of non-infringement of claim
45 of the ’700 Patent, this court reverses. This court also
reverses the denial of a permanent injunction against
continued infringement of the ’978 Patent, and remands
for entry of a permanent injunction consistent with this
opinion. This court also vacates the district court’s ongoing
royalty rate for the ’530 Patent and the ’978 Patent,
and remands to establish a new pre-injunction ongoing
royalty rate consistent with this opinion. Because the
‘530 patent has expired, any permanent injunction as to
this patent is now moot, and the ongoing royalty ceases to
apply after the date of expiration.

One claim of relevance:

Douglas asserted independent claims 1, 38, and 45 of
the ’700 Patent against Buyers’s SnowDogg Snowplows.
Claim 1 recites:
1. A vehicle mounted snowplow blade assembly

a vehicle having a frame member and a bumper,
a mounting frame fixed to the frame member and
located generally behind the bumper,
a snowplow blade assembly including an A-frame
and a snowplow blade fixed to the A-frame,
a lift frame supported by the A-frame, and
mounting means for selectively connecting the Aframe
to the mounting frame for pivotable movement
about a generally horizontally extending
pivot axis and for affording removal of the Aframe
and the lift frame from the mounting frame
as a unit so as to leave the mounting frame on the
vehicle and behind the bumper.

As to the law of summary judgment:

In this case, the law of the United
States Court of Appeals for the Seventh Circuit draws all
reasonable inferences in favor of the non-movant in
summary judgment cases and determines whether the
district court correctly concluded that no reasonable jury
could find in favor of the moving party. See Stoner v.
Wisconsin Dep’t of Agric., Trade & Consumer Prot., 50
F.3d 481, 484 (7th Cir. 1995).

As to an error of claim construction:

The district court erred, however, in construing the
term “connected to” in claim 45 to require a direct connection
between the A-frame and the mounting frame. The
plain language of the claim counsels against this narrow
interpretation. “[T]he words of a claim ‘are generally
given their ordinary and customary meaning’ . . . that the
term would have to a person of ordinary skill in the art in
question at the time of the invention.” Phillips v. AWH
Corp., 415 F.3d 1303, 1312–13 (Fed. Cir. 2005) (en banc)
(quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d
1576, 1582 (Fed. Cir. 1996)).
The ordinary meaning of “connected to” encompasses
indirect linkages. Indeed, the specification uses variations
of the term “connect” to describe indirect connections.
For example, the specification states that the
snowplow blade “is connectable to the mounting frame . . .
through an A-frame.” ’700 Patent col. 4 ll. 49–57

As to permanent injunctions:

This court reviews the denial of a permanent injunction
for an abuse of discretion. i4i Ltd. P’ship v. Microsoft
Corp., 598 F.3d 831, 861 (Fed. Cir. 2010). To be entitled
to a permanent injunction, a patentee must show: (1) it
has suffered an irreparable injury; (2) remedies available
at law are inadequate to compensate for that injury; (3)
considering the balance of hardships between the plaintiff
and defendant, a remedy in equity is warranted; and (4)
the public interest would not be disserved by a permanent
injunction. Id. (citing eBay Inc. v. MercExchange, L.L.C.,
547 U.S. 388, 391 (2006)). (...)
Simply because a patentee manages to maintain a
profit in the face of infringing competition does not automatically
rebut a case for irreparable injury. (...)
Here, the district court
likened Douglas’s snowplow to a Mercedes Benz S550 and
Buyers’s snowplow to a Ford Taurus. Id. Indeed, buyers
interested in purchasing the Mercedes, when presented
with both choices, would not likely switch to the Ford and
vice versa. However, if the Ford made its place in the
market by infringing on the intellectual property of the
Mercedes and capitalized on its similarity to the better
product, then the harm to the Mercedes product might go
beyond a simple counting of lost sales—some of which
would occur anyway if the Ford marketed itself effectively
as a “Mercedes at half the price.” The Mercedes would
lose some of its distinctiveness and market lure because
competitors could contend that they had “similar features”
without noting that those features infringe Mercedes’s
proprietary technologies.

Note the text

Furthermore, as Buyers’s
expert agreed, Douglas’s reputation would be damaged if
its dealers and distributors believed it did not enforce its
intellectual property rights. Lastly, the evidence shows
that Douglas had never licensed the infringed patents,
and intentionally chose not to, so that it could maintain
market exclusivity. Exclusivity is closely related to the
fundamental nature of patents as property rights. It is an
intangible asset that is part of a company’s reputation,
and here, Douglas’s exclusive right to make, use, and sell
the patented inventions is under attack by Buyers’s


While the general public certainly enjoys
lower prices, cheap copies of patented inventions have the
effect of inhibiting innovation and incentive. This detrimental
effect, coupled with the public’s general interest in
the judicial protection of property rights in inventive
technology, outweighs any interest the public has in
purchasing cheaper infringing products. In sum, the
public has a greater interest in acquiring new technology
through the protections provided by the Patent Act than it
has in buying “cheaper knock-offs.”

The 25% rule is mentioned:

First, the district court abused its
discretion by applying the infamous 25% rule of thumb,
which this court held in Uniloc was fundamentally
flawed. Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d
1292, 1317 (Fed. Cir. 2011).

Judge Mayer dissented:

I respectfully dissent. Because Douglas Dynamics,
LLC (“Douglas”) failed to meet the prerequisites for
injunctive relief set forth in eBay Inc. v. MercExchange,
L.L.C., 547 U.S. 388, 391 (2006), the district court properly
denied its request for a permanent injunction. The
trial court also correctly determined that the snowplow
assemblies manufactured by Buyers Products Company
(“Buyers”) do not infringe claim 45 of U.S. Reissue Patent
No. 35,700 (the “’700 patent”) because that claim requires
a direct connection between the snowplow frames. I
would affirm.

eBay is mentioned in the dissent:

eBay, however, rejected
this approach, making clear that a permanent injunction
should issue only if the traditional four-factor test for
injunctive relief is satisfied. 547 U.S. at 391. Under this
four-factor test, a litigant is entitled to a permanent
injunction only if he establishes that: (1) he has suffered
irreparable injury; (2) monetary damages are inadequate
to compensate for that injury; (3) considering the balance
of hardships between the parties, a remedy in equity is
warranted; and (4) the public interest would not be “disserved”
by the issuance of a permanent injunction. Id.

Of market share:

Given that Douglas and Buyers
are not direct competitors and Douglas was unable to
produce any credible evidence that it was likely to lose
profits or market share as a result of future sales of
Buyers’ low-end plows, the trial court was fully justified
in concluding that the failure to issue a permanent injunction
would not result in irreparable harm. See ActiveVideo
Networks, Inc. v. Verizon Commc’ns, Inc., 694
F.3d 1312, 1339 (Fed. Cir. 2012) (concluding that there
was no irreparable harm where the parties did “not share
a customer base”).


Post a Comment

<< Home