Last Month at the Federal Circuit - September 2010
Judges: Rader (author), Archer, Prost
[Appealed from N.D. Cal., Judge Alsup]
In Geo M. Martin Co. v. Alliance Machine Systems
International LLC, Nos. 09-1132, -1151 (Fed. Cir.
Aug. 20, 2010), the Federal Circuit affirmed the district
court's JMOL that Geo M. Martin Company's
("Martin") patent is invalid as obvious.
Martin has been in the wood-stacking business for the last forty years and currently has about 90 percent of the stacker market. Recently, Martin invented and began manufacturing a bundle breaker to sell along with its stackers. A "bundle breaker" is a machine used to separate stacked sheets of corrugated board. Martin was granted U.S. Patent No. 6,655,566 ("the '566 patent") for its bundle breaker. The '566 patent claims an improvement over the traditional bundle breaker by providing "compliance structures," which allow a bundle breaker to simultaneously break multiple stacks of corrugated board (logs) of different heights.
Martin's main competitor in the bundle-breaking business is Alliance Machine Systems International LLC ("Alliance"). Alliance also sells bundle breakers that break multiple bundles having uneven heights. Alleging that Alliance's bundle breaker infringed the claims of its '566 patent, Martin sued Alliance for patent infringement. After a jury trial, the jury announced that it could not reach a unanimous verdict. In response, each side filed a renewed motion for JMOL. The district court granted Alliance's JMOL motion on the issue of invalidity, ruling that the '566 patent is invalid as obvious. Martin appealed.
The Federal Circuit held that Martin's bundle-breaking machine would have been obvious to one of skill in the art at the time its application was filed. In its decision, the Court relied on three pieces of prior art that showed Martin's machine was obvious: the Pallmac machine, the Visy machine, and the Tecasa machine.
First, Martin argued that the Pallmac machine was not invalidating prior art because it clamped incoming logs with a compliance structure from the bottom instead of from the top, as in Martin's machine. The Court found that this small difference was insignificant. There were only a discrete number of possible design options for choosing the location of the compliance structure. According to the Court, bottom versus top is exactly the type of finite number of identified, predicable solutions that justifies a legal conclusion that the result, when expected, is the product not of innovation but of ordinary skill and common sense.
The next piece of prior art, the Visy machine, contained all the claimed elements of Martin's invention, including a compliance structure. However, the Visy machine was never able to consistently break multiple bundles having uneven heights. Martin argued that the Visy machine should not be viewed as prior art against its own invention because it was not commercially productive. The Court disagreed. According to the Court, under an obviousness analysis, a reference need not work to qualify as prior art; it qualifies as prior art, regardless, for whatever is disclosed therein. Therefore, the Court found the fact that the Visy machine did not work in a commercial capacity did not bar it from being cited as prior art against Martin's patent.
Further, Martin claimed that the Visy machine was not prior art because Martin claimed its invention using the Jepson claim "to an improvement in a bundle beaker." Martin argued that an accused infringer must show that any prior art must contain an improvement over and above the improvement recited in the body of the claim. To the contrary, the Court found that although the fact that the patentee has chosen the Jepson form of the claim evidences the intention to use the preamble to define, in part, the structural elements of his claimed invention, the extent of the claimed improvement is defined only by the body of the claim. Thus, if the patentee intended to claim an improvement that included a structure for "reliable breaking" measured against some kind of commercial production standard, it should have explicitly done so. While the Court agreed that prior art must teach a person of ordinary skill to make an apparatus that works for its intended purpose, the Court found the Visy machine did this—just not at production speed.
Finally, the Court reviewed the Tecasa machine. While Martin stipulated that the Tecasa machine met every limitation of every asserted claim, it swore behind the Tecasa machine's prior art date. While the Court agreed that the Tecasa machine could not be used as prior art evidence of obviousness, the Court found it could be used to show simultaneous invention as an indicia of obviousness. Though invented a year after Martin's first reduction to practice, the existence of the Pallmac and Visy machines shows that the Tecasa machine was invented within a comparatively short space of time and qualifies as a simultaneous invention. While this is not determinative of statutory obviousness, the Court found it is strong evidence of what constitutes the level of ordinary skill in the art.
In reviewing secondary considerations of nonobviousness, the Court found that these considerations weighed towards, rather than against, a finding of obviousness. First, while commercially successful, much of Martin's commercial success was due to Martin's pre-existing market share in the stacker market, which allowed Martin to sell a single-source system of stackers and bundle breakers. Second, where the differences between the prior art and the claimed invention are as minimal as they are here, the Court found that it cannot be said that any long-felt need was unsolved. Third, rather than showing failure of others in creating the claimed invention, Martin's superiority was based on its enhanced production speed over and above the claimed ability to handle a plurality of logs. Finally, the Court found the evidence of Alliance's copying of the claimed invention is hardly compelling because a showing of copying is only equivocal evidence of nonobviousness in the absence of more compelling objective indicia of other secondary considerations.
In light of the strong evidence of obviousness based on the Pallmac and Visy prior art coupled with the near-simultaneous invention of the Tecasa machine, the Court found Martin's objective evidence of nonobviousness would fail to make a difference in this case. The Court affirmed the district court's grant of JMOL that the '566 patent is invalid as obvious.
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