Slip Track Systems, Inc. v. Metal Lite, Inc.

113 F. App'x 930
CourtCourt of Appeals for the Federal Circuit
DecidedDecember 1, 2004
Docket2004-1070
StatusUnpublished
Cited by5 cases

This text of 113 F. App'x 930 (Slip Track Systems, Inc. v. Metal Lite, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Slip Track Systems, Inc. v. Metal Lite, Inc., 113 F. App'x 930 (Fed. Cir. 2004).

Opinions

DECISION

SCHALL, Circuit Judge.

Metal Lite, Inc. (“Metal Lite”) appeals the final judgment of the United States District Court for the Central District of California (1) that U.S. Patent No. 5,127,-[933]*933760 (“the ’760 patent”), owned by Slip Track Systems, Inc. (“Slip Track”), has priority over U.S. Patent. No. 5,127,203 (“the ’203 patent”), owned by both Metal Lite and Slip Track; and (2) that Metal Lite infringed the ’760 patent and is liable for damages in the amount of $7,000,000 by reason of that infringement. Slip Track Sys., Inc. v. Metal Lite, Inc., No. SA CV 98-20 AHS (C.D.Cal. Oct. 22, 2003) (“Final Judgment ”). For the reasons set forth below, we affirm the judgment of the district court on the priority issue. However, we vacate the judgment of infringement and the award of damages in favor of Slip Track and remand the case to the district court for further proceedings on the issue of infringement based upon the claim construction set forth in this opinion.

DISCUSSION

I.

After remand following our decision in Slip Track Systems, Inc. v. Metal Lite, Inc., 304 F.3d 1256 (Fed.Cir.2002) (“Slip Track II ”), the district court awarded the ’760 patent priority over the ’203 patent. The district court’s award of priority was based on a jury’s finding that the invention of the ’760 patent was reduced to practice before the invention of the ’203 patent. Metal Lite’s sole argument on appeal with respect to the priority issue is that the district court erred in not granting its motion in limine to bar Slip Track, an assignee and 50% owner of the ’203 patent, from challenging the validity of the ’203 patent based upon the doctrine of assignee estoppel. We find no error in the district court’s decision.

Assignee estoppel is an equitable doctrine which, under appropriate circumstances, bars the assignee of a patent from contesting the validity of the assigned patent. C.f. Diamond Scientific Co. v. Ambico, Inc., 848 F.2d 1220, 1225 (Fed.Cir.1988) (“[Djespite the public policy encouraging people to challenge potentially invalid patents, there are still circumstances in which the equities of the contractual relationships between the parties should deprive one party ... of the right to bring that challenge.”). For example, circumstance may warrant application of the doctrine to prevent an assignee from avoiding royalty payments otherwise due under an assignment contract by challenging the validity of the assigned patent. See Baladevon, Inc. v. Abbott Labs., Inc., 871 F.Supp. 89, 96 (D.Mass.1994); Sybron Transition Corp. v. Nixon, 770 F.Supp. 803, 811-12 (W.D.N.Y.1991). This case, however, does not present such circumstances. Slip Track only asserted invalidity of the ’203 patent after Metal Lite put Slip Track’s ’760 patent into reexamination before the Patent and Trademark Office on the grounds that it was invalid in view of the ’203 patent. See Slip Track Sys., Inc. v. Metal Lite, Inc., 159 F.3d 1337, 1338-39 (Fed.Cir.1998) (“Slip Track I”). Moreover, Slip Track owns 100% of the ’760 patent but only 50% of the ’203 patent. The reexamination consequently forced Slip Track to choose between protecting the validity of either the ’760 patent or the ’203 patent. Slip Track made the natural decision to protect its greater of two property interests, the ’760 patent. There is nothing inequitable here. Having rejected Metal Lite’s assignee estoppel argument, we affirm the judgment of the district court on the priority issue.

II.

After determining that the ’760 patent has priority over the ’203 patent, the district court granted Slip Track’s motion in limine barring Metal Lite from contesting infringement and subsequently entered judgment against Metal Lite for infringe[934]*934ment of the ’760 patent. The district court based its decision to grant the motion on three separate grounds: (1) the doctrine of marking estoppel; (2) our decision in Slip Track II; and (3) Metal Lite’s litigation conduct. Slip Track Sys., Inc. v. Metal Lite, Inc., No. SA CV 98-20 AHS, slip op. at 6-13 (C.D.Cal. Dec. 11, 2003) (“Order Denying Motion for New Trial ”). For the reasons that follow, we reject each of the grounds upon which the district court relied in granting Slip Track’s motion in limine. We consequently vacate the judgment of infringement and damages in favor of Slip Track and remand the case to the district court for proceedings on the issue of infringement.

A. Marking Estoppel

The district court determined that Metal Lite’s marking of its product with the ’760 and ’203 patents estopped it from contesting infringement of the ’760 patent under the doctrine of marking estoppel. Specifically, the court determined that the combination of (1) Metal Lite’s deliberate marking with the ’760 patent from 1994 to September of 1995, while in partnership with Slip Track; and (2) Metal Lite’s continued marking with the ’203 patent following dissolution of the partnership in September of 1995, justified estopping Metal Lite from subsequently denying infringement of the ’760 patent. The district court reasoned that marking with the ’203 patent was tantamount to marking with the ’760 patent because Metal Lite had argued invalidity of the ’760 patent during the priority dispute based on overlapping subject matter with the ’203 patent. Order Denying Motion for New Trial, slip op. at 7-9.

At the outset, we note that the parties dispute the continued viability of the doctrine of marking estoppel. We find it unnecessary to address this issue because, even assuming the doctrine remains viable, it does not apply to the facts of this case. “[The doctrine of] marking estoppel, like other varieties of estoppel, should arise only when a consideration of all aspects of a defendant’s pertinent conduct makes it inequitable for him to take a position contrary to his prior statements or actions.” Boyd v. Schildkraut Giftware Corp., 936 F.2d 76, 79 (2d Cir.1991). The doctrine serves to protect the public by cautioning manufacturers that “care must be taken in avoiding misrepresentation to the public that goods are protected by a patent.” SmithKline Diagnostics, Inc. v. Helena Labs. Corp., 859 F.2d 878, 890-91 (Fed.Cir.1988) (quoting Crane Co. v. Aeroquip Corp., 364 F.Supp. 547, 560 (N.D.III. 1973)).

It is undisputed that Metal Lite only marked its product with the ’760 patent for a period of about one year while in partnership -with Slip Track. This marking was deliberate. Indeed, Slip Track consented to the marking. There is no evidence, however, that Metal Lite deliberately mismarked its products during this time. In other words, nothing indicates Metal Lite believed its product to fall outside the scope of the ’760 patent’s claims when it made the decision to mark with the ’760 patent. See Boyd, 936 F.2d at 79 (explaining that “deliberate mismarking” may provide grounds for applying estoppel);

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113 F. App'x 930, Counsel Stack Legal Research, https://law.counselstack.com/opinion/slip-track-systems-inc-v-metal-lite-inc-cafc-2004.