Lazare Kaplan International, Inc. v. Photoscribe Technologies, Inc.

628 F.3d 1359, 97 U.S.P.Q. 2d (BNA) 1437, 2010 U.S. App. LEXIS 25967, 2010 WL 5176746
Court of Appeals for the Federal Circuit·Decided December 22, 2010·No. 2009-1251·Published·Cited by 65 cases

Opinion

LINN, Circuit Judge.

After jury and bench trials, the United States District Court for the Southern District of New York entered a final judgment against Lazare Kaplan International, Inc. (“Lazare”) in favor of Gemological Institute of America (“the Institute”); Photoscribe Technologies, Inc. (“Photoscribe”); and Photoscribe’s founder and president, David Benderly (collectively, “the Defendants”) decreeing the following: (1) the Defendants had not infringed the asserted claims of United States Patents No. 6,476,-351 (“the '351 Patent”) and No. 7,010,938 (“the '938 Patent”) and claim 18 of the '351 Patent is invalid; (2) the '351 and,'938 patents are unenforceable due to inequitable conduct; (3) the ease is exceptional under 35 U.S.C. § 285; and (4) the Defendants are entitled to their reasonable attorneys’ fees. Lazare Kaplan Int’l, Inc. v. Photoscribe Techs., Inc., No. 06-CV-4005 (TPG) (S.D.N.Y. Jan. 22, 2009). The district court denied Lazare’s motions for judgment as a matter of law and for new trials, and Lazare appealed. For the rea *1364 sons discussed below, this court affirms-in-part, vacates-in-part, and remands for further proceedings consistent with this opinion.

I. Background

Lazare is the owner of the '351 and '938 patents, entitled “Laser Marking System” and “Microinscribed Gemstone,” respectively. The '351 Patent discloses a system that uses a fixed laser to create a series of microscopic spots on the surface of gemstones such as diamonds. Together these spots form a “microinscription” that is visible with the aid of a jeweler’s loupe and can be used to authenticate and track gemstones. In addition to a laser, the disclosed system includes a movable “stage” that positions a gemstone (also referred to as a “workpiece”) to be inscribed, an optical system that focuses energy from the laser onto the gemstone, and a computer system for control. The system also typically includes two or more video cameras mounted at right angles to each other that provide images of the gemstone to a computer display throughout the inscription process. The laser, stage, and optical system are rigidly mounted on a common frame to reduce the effect of vibration on the system. FIG. 9 of the '351 Patent illustrates a preferred embodiment of the system:

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As is relevant here, the '351 Patent claims a microinscribing system that has a “rigid frame” supporting the laser, stage, and optical system “in fixed relation, to resist differential movements” and to “increase immunity to vibrational misalignments.” The patent also claims a method of microinscribing that includes “controlling the directing” of laser energy based on marking instructions and imaging.

The '938 Patent is a descendant of the '351 Patent that has a largely similar specification. As its title suggests, the '938 Patent claims microinscribed gemstones that have specified characteristics. In particular, the patent claims gemstones with laser generated spots, the “positional accuracy” of which is “within about ±1 micron” and the “positional repeatability” of which is “within about 1.0 micron.” The patent also claims ranges of depths and widths of each spot on a gemstone, the depths being “less than about 10 microns” *1365 and widths being either “less than about 9 microns” or “less than about 12 microns.”

Lazare also owns United States Patent No. 4,392,476 (referred to as “the Gresser Patent” after co-inventor Herbert Gresser), entitled “Method and Apparatus for Placing Identifying Indicia on the Surface of Precious Stones Including Diamonds.” The patent, which is prior art to both the '351 and '938 patents, discloses a system for inscribing gemstones that includes a “laser beam generation system,” an “optical system,” and a “table system.” Gresser Patent col.2 11.13-68. Herbert Gresser and his company, Group II Manufacturing Ltd. (“Group II”), developed a commercial embodiment of the disclosed system for Lazare in the 1980’s that the parties refer to as the “Gresser machine.” According to a contract concerning the development of the Gresser machine, the machine was to include “a rigid base to support a laser, scanner optics, and object fixture with adequate protective covers.” To prevent vibrations from causing errors during the inscription process, the machine rested on a cushion of compressed air produced by a set of pneumatic legs positioned underneath the machine. The '351 Patent makes passing reference to both the Gresser Patent and the Gresser machine. Neither the '351 Patent nor the Gresser Patent, however, explicitly discloses that the Gresser machine included the rigid base mentioned above.

Lazare initiated the underlying action against the Defendants, claiming that the Defendants infringed various claims of both the '351 and '938 patents, including claims 1, 7, and 18 of the '351 Patent and claims 1, 24, 62, and 70 of the '938 Patent. Lazare asserted, among other things, that Photoscribe, acting under the exclusive control of David Benderly, manufactured infringing inscription machines and sold them to the Institute, which in turn used the machines to produce infringing diamonds. The Defendants denied the allegations and argued that the asserted claims are invalid and that both patents are unenforceable due to inequitable conduct.

Before trial, the parties agreed upon the meaning of the “positional accuracy” and “positional repeatability” limitations, but disputed the meanings of the “controlling the directing” and “rigid frame” limitations. After construing the disputed limitations at a hearing pursuant to Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed.Cir.1995) (en banc), the district court determined that under its construction of “controlling the directing” claims 1 and 7 of the '351 Patent were not literally infringed and granted summary judgment of no literal infringement of these claims in favor of the Defendants. Lazare Kaplan Int’l, Inc. v. Photoscribe Techs., Inc., No. 06-CV-4005 (TPG), 2008 WL 355605, at *1 (S.D.N.Y. Feb.5, 2008) (“Summary Judgment Order”). The court, however, permitted Lazare to argue at trial that these claims were infringed under the doctrine of equivalents. Id.

After a two-week jury trial, the jury found that the Defendants had not infringed any of the asserted claims. The jury also found that the Defendants had proven by clear and convincing evidence that claim 18 of the '351 Patent is invalid. In a subsequent bench trial on inequitable conduct, the district court concluded that Lazare had committed inequitable conduct with respect to the '351 Patent by failing to adequately disclose the structure of the Gresser machine to the United States Patent and Trademark Office (“PTO”). The court found that Lazare had also engaged in inequitable conduct with respect to the '938 Patent because Lazare did not submit to the PTO a declaration Lazare created that demonstrated that the Gresser machine could produce inscriptions with line *1366 widths and depths falling within the ranges recited in the claims.

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Lazare Kaplan International, Inc. v. Photoscribe Technologies, Inc., 628 F.3d 1359, 97 U.S.P.Q. 2d (BNA) 1437, 2010 U.S. App. LEXIS 25967, 2010 WL 5176746 (Fed. Cir. 2010).

628 F.3d 1359 (Lazare Kaplan International, Inc. v. Photoscribe Technologies, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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