WINDSURFING INTERN. INC. v. AMF, INC. Appeal Nos. 85-2808, 85-2809, 85-2835, 85-2836, 86-514 and 86-548.
782 F.2d 995 (1986)
WINDSURFING INTERNATIONAL, INC., Appellees, v. AMF, INCORPORATED, Appellant. BIC LEISURE PRODUCTS, INC., Windglider Fred Ostermann, GmbH, Appellants/Cross-Appellees, v. WINDSURFING INTERNATIONAL, INC., Appellee/Cross-Appellant. WINDSURFING INTERNATIONAL, INC., Cross-Appellant/Appellee, v. FRED OSTERMANN GMBH, Amf, Inc., Downwind Corp., and Freeboard Sailing, Inc., Cross-Appellees/Appellants.
United States Court of Appeals, Federal Circuit.
January 28, 1986.
Pasquale A. Razzano, Curtis, Morris & Safford, P.C., New York City, was on the brief for Downwind Corp.
Before MARKEY, Chief Judge, SMITH and NEWMAN, Circuit Judges.
MARKEY, Chief Judge.
Consolidated appeal from two judgments of the United States District Court for the Southern District of New York: (1) holding claims 15-21 of Windsurfing International's (WSI's) U.S. Patent Re. 31,167 (`167 patent) valid and infringed; (2) holding that WSI had misused the patent; (3) enjoining AMF, Inc. (AMF), BIC Leisure Products, Inc., and Windglider Fred Ostermann, GmbH (BIC); and (4) refusing to enjoin infringing defendant Downwind Corp. (Downwind).
(1) Proceedings in the District Court
WSI sued AMF, BIC and Downwind, alleging infringement of its '167 patent. AMF then sought a declaratory judgment that the patent is invalid for obviousness under 35 U.S.C. § 103, unenforceable because of patent misuse, and not infringed. Also, AMF sought the cancellation of WSI's registrations of "WINDSURFER" and related trademarks
Consolidating the three actions, the district court held a non-jury trial on 13 dates between November 19 and December 11, 1984, filed an opinion July 15, 1985 and entered judgments on September 11, 1985. AMF in Appeal Nos. 85-2808/2809, BIC in No. 85-2835, and Downwind in No. 86-548, appeal from the judgments holding the '167 patent valid and infringed. AMF and BIC appeal from the grant of injunctions.
(2) The '167 Patent
The patent in suit relates to the sport of "sailboarding",
A preferred embodiment of the claimed invention is shown in Figure 1 of the '167 patent:
A participant stands on the top surface of surfboard 10 behind universal joint 36, grasps boom 16 or boom 18 (depending on wind direction), and controls the speed and direction of the board by maneuvering the boom to which sail 14 is attached. If a participant begins to lose control in a sudden wind surge, he or she merely releases the boom and the universal joint allows the sail to fall freely into the water.
Claim 15 is representative:
The underscored limitation sets forth the boom and was added when WSI's U.S. Patent No. 3,487,800 was reissued as the '167 patent.
Did the district court err in: (1) holding the claimed invention nonobvious under 35 U.S.C. § 103
On appeal, AMF
In deferring to the Board's decisions concerning the allowance of the claims in the reissued patent, the district court was recognizing the statutory mandate that all patents are presumed valid. 35 U.S.C. § 282 (1982); see Fromson v. Advance Offset Plate, Inc.,
AMF contends that, because the Board did not mention the obviousness of replacing the rig, shown in a publication referred to as the "Darby reference", with the boom disclosed in the '167 patent, no deference is due the Board decisions. The district court carefully reviewed the administrative record and stated that such argument "oversimplifies the depth of the Board's review and assumes the Board ignored other issues raised in the parties' extensive briefs." 613 F.Supp. at 945, 227 USPQ at 936. We agree. Merely because a decision does not mention a particular point "forms no basis for an assumption that it did not
The district court conducted a thorough Graham
The district court did determine that it would have been obvious to replace a kite sail with a fore and aft sail, and to add a second opposed boom.
WSI's expert, Dr. Bradfield, conceded that certain advantages were due to particular added improvements, but he consistently maintained that the overall performance capabilities of the claimed invention were mainly due to the combination of the universal joint and the wishbone rigging. The district court found that testimony credible and AMF has shown no basis on which this court could engage in the normally inappropriate process of substituting a contrary credibility determination for that of the district court.
Before concluding that the combination of the universal joint with the wishbone rigging would not have been obvious, the district court reviewed the objective evidence, Stratoflex, Inc. v. Aeroquip Corp.,
In essence, AMF says that the commercial success found by the district court was due in large part to "other economic and commercial factors unrelated to the technical quality of the patented subject matter." Id. at 1027, 226 USPQ at 888. Particularly,
Having carefully reviewed the record before us, we conclude that the district court did not impermissibly credit the evidence of commercial success. It specifically found that WSI's commercial success should not be "significantly diminished" by testimony that 10-15 percent of gross receipts are from paraphernalia. 613 F.Supp. at 948 n. 84, 227 USPQ at 938 n. 84. The court accorded some weight to motivational factors leading to German licenses, but concluded that "widespread recognition and use of the invention" indicated that it would not have been obvious. Id. at 949, 227 USPQ at 938-39. The commercial success of the invention was found to have been "well beyond the effect" of WSI's promotional efforts. Id., 227 USPQ at 939.
Absent some intervening event to which success must be attributed, the delay in achieving the great commercial success of the claimed invention in this case does not detract from the probative value of the evidence of that success. Similarly, AMF's suggestion that objective evidence of non-obviousness can be considered only when the invention solves a long-existing problem is unwarranted. Providing a solution to a long existing problem is but one type of objective evidence useful in making obviousness/non-obviousness determinations. See Leinoff v. Louis Milona & Sons, Inc.,
Having carefully considered AMF's arguments and the evidence relied upon by the district court, we conclude that AMF has not discharged its burden on appeal, i.e., of persuading us that the district court committed reversible legal error in its determination that the invention would not have been obvious, or that the court's probative findings underlying that determination were clearly erroneous. See Atlas Powder Co. v. E.I. DuPont De Nemours,
Downwind alone appeals from the judgment of infringement, urging that its structure does not have a "joint having a plurality of axes of rotation." Downwind employs a flexible rubber tube or rod connecting the mast and the board.
Claim interpretation is a question of law, McGill, Inc. v. John Zink Co.,
Whether Downwind's accused device infringes the claims as interpreted is a fact question, Raytheon Co. v. Roper Corp.,
(3) Patent Misuse
AMF's allegation of patent misuse is based on this paragraph included in license agreements between WSI and eleven licensees:
The district court said that whether that provision gives rise to a patent misuse defense depends on whether the registered trademarks are generic. Having found the marks generic, the court concluded "that Paragraph 10 has an intrinsically inhibiting effect on competition beyond the scope of the patent...." 613 F.Supp. at 953, 227 USPQ at 942.
The court went on to determine that the "level of misuse" did not warrant rendering the patent entirely unenforceable because the court found the "record insufficient to determine fairly the extent to which WSI sought to enforce the provision and the extent of any monetary gain to it" and also found the record insufficient to support a finding that "WSI necessarily would or should have known that its mark had become a common descriptive name for the product." Id.
The court set the damages issue for determination at a later time, deferred until that time "the resolution as to what relief, if any, WSI's misuse of its patent privilege warrants," and decided to enforce the '167 patent. Id.
In its cross-appeals, WSI contends that a mere inclusion in a patent license agreement of a promise not to infringe a licensor's trademark does not constitute patent misuse. Acts constituting misuse, says WSI, must be "coercive" toward an improper advantage. WSI argues that it was merely asserting rights it possessed under the trademark laws and, thus, the patent misuse defense should fall.
The doctrine of patent misuse is an affirmative defense to a suit for patent infringement, see Bio-Rad Laboratories, Inc. v. Nicolet Instrument Corp.,
To sustain a misuse defense involving a licensing arrangement not held to have been per se anticompetitive by the Supreme Court,
That the marks were found generic after trial and long after execution of the license cannot of itself prevent a full enforcement of the '167 patent. Trademark registrations enjoy a statutory presumption of validity. 15 U.S.C. § 1057(b) (1982). As the district court found, AMF failed to show that WSI granted the licenses or enforced its rights in the marks with knowledge that they were or had become a common descriptive name, and AMF failed to show that WSI should have had that knowledge. On the present record, the district court was improperly persuaded to rest its holding of misuse entirely on an after-the-fact determination that the marks are generic. Because that was error, the holding that the facts of record established a misuse of the patent right must be reversed.
The statute, 35 U.S.C. § 283, empowers district courts to "grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." The statute makes clear that the district court's grant or denial of an injunction is within its discretion depending on the facts of each case. Roche Products, Inc. v. Bolar Pharmaceutical Co.,
The holding of misuse having been reversed, we need not address AMF's contention that the district court should not have enjoined further infringement of the '167 patent in light of that holding.
AMF argues that the district court improperly ignored its intervening rights, a defense it contends was raised in the pleadings and at the injunction hearing, citing Seattle Box Co. v. Industrial Crating & Packing, Inc.,
Nothing in Seattle Box addresses the point at which the intervening rights
On its cross-appeal, WSI urges that the district court abused its discretion in refusing to enjoin Downwind. In denying injunctive relief against Downwind, the district court stated from the bench:
The relative size of multiple infringers should not alone serve as a basis for enjoining continued infringement by some and not by others.
The judgment of the district court upholding the validity of claims 15-21 of the '167 patent and finding them infringed, and the grant of injunctions against AMF and BIC are affirmed. The judgment that WSI is guilty of patent misuse is reversed. The case is remanded with instructions to vacate the order denying an injunction against Downwind and to reconsider WSI's request for that injunction.
AFFIRMED IN PART, REVERSED IN PART, VACATED IN PART, AND REMANDED.
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