“Questions of whether an accused patent infringer’s conduct was “egregious behavior” or “worthy of punishment” are not appropriate for jury consideration, agreed the CAFC. Nonetheless, it considered the jury instruction to be reasonably clear and correct to test for willful infringement.”
On January 13, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential decision affirming the District Court’s judgment of invalidity as to the asserted claims of U.S. Patent No. 8,720,320 (the ‘320 patent) and the award of attorney’s fees. The CAFC also affirmed the ruling of infringement as to the asserted claims of U.S. Patent No. 8,707,855 (the ‘855 patent). Adrian Rivera and Adrian Rivera Maynez Enterprises, Inc. (ARM), owner of the ‘320 patent, initiated the lawsuit against Eko Brands LLC (Eko), owner of the ‘855 patent. ARM claimed Eko infringed claims 5-8 and 18-20 of the ‘320 patent.
The ‘320 Patent
ARM’s ‘320 patent describes an adaptor device used in conjunction with Keurig single-brew coffee machines or similar brewers. The single-brew coffee machines defined by the patent generally accept one of two cartridge formats: pods, which are “small, flattened disk-shaped filter packages of beverage extract” or “large cup-shaped beverage filter cartridges”. The patent resolved the issue of K-Cup machines, a particular type of Keurig coffee machine, being limited to using exclusively cup-shaped cartridges by making both formats compatible with its adaptor.
Eko Succeeds in District Court
On August 4, 2014, ARM initiated a complaint against Eko and other respondents at the International Trade Commission (ITC) on the ‘320 patent. The ITC found in proceedings related to the other respondents that claims 5-7, 18, and 20 were invalid for lack of written description. The ITC made no invalidity determination concerning claims 8 and 19, as those claims had been withdrawn as to respondents other than Eko, but Eko defaulted in the ITC proceedings with respect to ARM’s allegations that it infringed claims 8 and 19 and the ITC issued a limited exclusion order and cease and desist order.
Eko then sued Arm in the United States District Court for the Western District of Washington seeking a declaratory judgment of non-infringement as to claims 8 and 19 of the ‘320 patent and declaratory judgment that claims were invalid as obvious. ARM counterclaimed alleging infringement of claims 8 and 19. Eko moved for summary judgment of noninfringement and obviousness. The district court granted Eko declaratory judgment of noninfringement but denied summary judgment as to obviousness. After a five-day jury trial, the jury found both claims to be invalid as obvious and Eko was awarded attorney’s fees associated with obtaining a judgment of noninfringement and obviousness. ARM subsequently appealed the district court’s verdict.
The ‘855 Patent
Claim 8 of Eko’s ‘855 patent describes a reusable filter cartridge device for use with single-serve beverage brewing machines. The device allows for operation without piercing the filter cartridges, thereby permitting the device to be used multiple times. Eko asserted that ARM infringed claim 8 of the ‘855 patent. ARM Stipulated to infringement based on the district court’s claim construction and the jury awarded Eko compensatory damages without enhanced damages because ARM did not willfully infringe. ARM appealed the district court’s judgment of infringement and Eko cross-appealed the finding of no willful infringement and the denial of enhanced damages.
ARM argued the jury verdict on claims 8 and 19 of the ‘320 patent should be set aside because the district court erred in its claim construction and because under the proper construction, U.S. Patent No. 3,878,722 to Nordskog does not disclose a fully enclosed space and the obviousness verdict cannot stand. The district court construed the term “brewing chamber” in relationship to claims 8 and 19 as a compartment where brewing occurs which “does not necessarily have to be sealed or fully-enclosed.” ARM’s proposed construction required a “sealed or fully-enclosed” space and made three arguments in response.
ARM first argued that the ‘320 patent incorporated by reference two patents assigned to Keurig, U.S. Patent No. 5,325,765 (the Keurig ‘765 patent) and U.S. Patent No. 6,606,938 (the Keurig ‘938 patent), where these prior art references enclosed brewing chambers and so applied to their ‘320 patent. The Keurig ‘765 patent implicitly expresses the brewing chamber as being sealed, while the Keurig ‘938 patent’s figures “showed that the brewing chamber is not a fully-enclosed space,” said the CAFC. Therefore, the court concluded that nothing in the incorporated patent requires the brewing chamber to be fully sealed.
Second, ARM argued that the court must apply ARM’s proposed construction because certain embodiments within the specification have fully-enclosed structures. Contrary to ARM’s contention, other embodiments in the specification illustrate figures without a fully enclosed brewing chamber, the court noted. From Adams Respiratory Therapeutics, Inc., the court concluded that “a claim construction that ‘excludes the preferred embodiment is rarely, if ever, correct and would require highly persuasive evidentiary support.”’
Third, ARM implied that because the ‘320 patent states that the brewing chamber must “‘trap’ hot water, it must be a fully enclosed chamber.” The court called attention to the fact that the patent makes clear it is the beverage packet or pod, not the brewing chamber, that traps hot water.
The CAFC ultimately held that the district court correctly determined the term “brewing chamber” in the ‘320 patent does not require a fully-enclosed space.
Claims 8 and 19 of the ‘320 Patent Are Invalid as Obvious
In light of Nordskog, standing alone, and in combination with U.S. Patent No. 6,079,315 to Beaulieu (Beaulieu) or U.S. Patent No. 5,840,189 to Sylvan (Sylvan), the jury found claims 8 and 19 to be invalid as obvious. Claims 8 and 19 depend from claims 5 and 18 of the ‘320 patent which “require a ‘cover [of the brewing chamber that] is adapted to sealingly engaged with a top edge of  at least one sidewall.’” ARM contested that the jury’s finding of obviousness lacked substantial evidence because the cited references do not disclose this claim limitation. But the CAFC said that the jury could have found that Beaulieu disclosed this claim limitation when it described “a cartridge holder with a cover sealingly engaged with the top of the cartridge holder sidewall,” and found the jury’s findings were supported by substantial evidence.
Attorney’s Fees for Noninfringement
ARM claimed that the district court erred in granting Eko attorney’s fees because the district court’s construction of the term “passageway” in claims 8 and 19 was erroneous. The district court construed “passageway” as two-part, one being “‘a narrow space of some depth or length connecting one place to another,’ [and the second as,] not ‘encompassing a receptacle that had no bottom or that utilized a broad, thin mesh.’” This interpretation, ARM claimed, first improperly defined the claim language, second excluded an embodiment in the specification, and third is inconsistent with the construction adopted by the District Court for the Central District of California and the ITC to mean a path, channel, or course by which something passes” for the term “passageway.” Whether the first part was correct or not, the CAFC thought the second part of the construction was correct, and said the district court had properly granted summary judgment based on its construction.
Attorney’s Fees for Obviousness
The final argument raised by ARM was that the district court erred in granting attorney’s fees to EKO as to the issue of obviousness concerning the ‘320 patent. The district court did so because ARM’s conduct as to the issue of obviousness was “exceptional.” ARM recalled Checkpoint Systems, Inc.’s holding that “a party is entitled to rely on a court’s denial of summary judgment… as an indication that the party’s claims were objectively reasonable and suitable for resolution at trial.” But the holding that the denial of summary judgment conclusively established objective reasonableness was not conveyed from Checkpoint. An exceptional case defined by Octane Fitness is one that stands out from others with respect to the substantive strength of a party’s litigating position… or the unreasonable manner in which the case was litigated.” The district court reasoned that ARM offered no explanation to their obviousness position, except to assert that the cease and desist letter from the ITC remained valid. Also, ARM consciously failed to display secondary factors of non-obviousness, and so the CAFC found the lower court did not abuse its discretion.
ARM claim that the infringement judgment should be set aside because the district court erred in construing claim 8 of the ‘855 patent as not requiring a “single-serve beverage brewer.” The emphasis of claim 8 the court focused on was “for use with a single-serve beverage brewer having a brewing holster,” and so the CAFC said that claim 8 on its face does not require a beverage brewer but mentioned it to define the purpose and structure of the brewing device. The CAFC therefore held that the district court correctly construed claim 8.
On cross-appeal, Eko challenged the district court’s jury instruction on willful infringement, its finding of no willful infringement based on the instruction, and the court’s denial of enhanced damages based on the verdict. Before trial, the parties agreed to use the Federal Circuit Bar Association’s (FCBA) National Patent Jury Instructions (NPJI) No. 4.1. for willful infringement. Eko later objected to some of the language in the instruction, namely, “especially worthy of punishment” and “willful infringement is reserved for only the most egregious behavior”, arguing that it directed the jury to decide if damages should be enhanced or whether it is an exceptional case, rather than addressing the underlying question of whether the infringement was willful. The district court agreed and deleted the phrase “only the most” from the instruction and a verdict of no willful infringement nonetheless returned.
Questions of whether an accused patent infringer’s conduct was “egregious behavior” or “worthy of punishment” are not appropriate for jury consideration, agreed the CAFC. Nonetheless, it considered the jury instruction to be reasonably clear and correct to test for willful infringement. While the instruction said willful infringement is “reserved for egregious behavior,” it also clarified that willful infringement can also simply be deliberate infringement, said the CAFC. The instruction also comprised of a list of facts to aid the jury in deciding if there was intent and whether the ARM reasonably knew of its infringement. The totality of the instruction was adequate in determining willfulness, and the deletion of the two objected phrases requested by Eko failed to remedy the error required for a party seeking to alter a judgment based on erroneous jury instruction. The CAFC thus concluded the instruction was not legally erroneous.
Judge Reyna dissented in part, arguing that the district court relied on an erroneous construction of the term “passageway” as its basis for granting summary judgment and awarding attorney’s fees. “The district court erred in its construction of ‘passageway’ by rewriting the claims, including adding a negative limitation that is unsupported by the specification,” Judge Reyna wrote.