Ball Aerosol & Specialty Container, Inc. v. Limited Brands, Inc. (555 F.3d 984, 2009)

LOURIE, Circuit Judge.

Limited Brands, Inc., Bath & Body Works, Inc., Henri Bendel, Inc., and Bath & Body Works, Inc. doing business as The White Barn Candle Co. (collectively, “Limited”) appeal from the final judgment of the United States District Court for the Northern District of Illinois granting summary judgment of validity and infringement of U.S. Patent 6,457,969 (“the '969 patent”), awarding damages, and denying a motion for reconsideration. See Ball Aerosol & Specialty Container, Inc. v. Limited Brands, Inc., 553 F.Supp.2d 939 (N.D.Ill.2008); Ball Aerosol & Specialty Container, Inc. v. Limited Brands, Inc., 514 F.Supp.2d 1051 (N.D.Ill.2007); Ball Aerosol & Specialty Container, Inc. v. Limited Brands, Inc., No. 05-CV-3684, 2006 WL 6178978 (N.D.Ill. June 28, 2006) (document 137) (“Validity Motion ”); Ball Aerosol & Specialty Container, Inc. v. Limited Brands, Inc., No. 05-CV-3684 (N.D.Ill. June 28, 2006) (document 139) (“Infringement Opinion”); U.S. Can Co. v. Limited Brands, Inc., No. 05-CV-3684, 2006 WL 1049581 (N.D.Ill. Apr. 19, 2006) (“Claim Construction Opinion ”). Because the court erred as a matter of law in failing to find claims 1 and 5 of the '969 patent to have been obvious and in finding infringement of those claims, we reverse.

BACKGROUND

Ball Aerosol and Specialty Container, Inc. (“BASC”) owns the '969 patent by assignment from former employee Jivan Kumar Kholsa. The '969 patent claims a candle tin with a removable cover that also acts as a base for the candle holder. When a candle holder is placed directly on a table or other surface, the heat of the lit candle can cause scorching or damage to the surface. Putting a candle tin in the configuration claimed in the '969 patent, with the candle holder resting on top of the cover, minimizes this scorching by removing the candle holder from direct contact with the underlying surface. The '969 patent also claims protrusions, or feet, on the closed end of the candle holder that rest on top of the closed end of the cover when it is used as a base, as depicted in the figure below.

'969 patent fig.l B.

In 2003, Limited designed the accused Travel Candle, which is a square-shaped candle tin with a removable cover and four protrusions on the closed end of the candle holder. On October 25, 2004, BASC sued Limited for infringement in the United States District Court for the Eastern District of Michigan. The case was transferred to the Northern District of Illinois on May 31, 2005. BASC ultimately limited its allegations of infringement to claims 1 and 5 of the '969 patent, which read as follows:

1. A candle tin comprising:

a hollow candle holder closed at one end in which a candle is disposed, the candle having a wick for the candle to burn when the wick is lit, the lit candle producing heat a portion of which is transferred through the holder to a surface upon which the candle tin is placed; a cover sized to fit over the holder and removably placed over an open end of the holder to cover the candle when the candle is not lit, the cover, when removed, being placed upon the surface with the holder being set upon the cover for the cover to support the holder above the surface whereby the heat generated by the burning candle does not damage the surface, the holder and cover being cup shaped with the cover placed upon the surface open end down so a closed end of the cover supports the holder above the surface, a closed end of the holder being adjacent the closed end of the cover; and, protrusions formed on the closed end of the holder and extending therefrom, the protrusions resting upon the closed end of the cover to seat the holder on the cover.

M5. A candle tin comprising:

a cup shaped holder in which a candle is disposed, the candle having a wick for the candle to burn when the wick is lit, the lit candle producing heat a portion of which is transferred through the holder to a surface upon which the candle tin is placed;

a cup shaped cover sized to fit over an open end of the holder and removably placed over the open end of the holder to cover the candle when the candle is not lit, the cover, when removed, being placed upon the surface and the holder being set upon the cover for the cover to support the holder above the surface whereby the heat generated by the burning candle does not damage the surface, the cover being placed upon the surface open end down for the closed end of the cover to support the holder above the surface; and,

protrusions formed on the closed end of the holder and extending therefrom, the protrusions resting upon the closed end of the cover to seat the holder on the cover.

’969 patent col.5 11.35-56; id. col.6 11.10-30.

On April 19, 2006, the district court construed the term “to seat” to mean “to either rest on or fit into the cover.” Claim Construction Opinion, 2006 WL 1049581, at *2. The parties had disagreed on whether the portion of claims 1 and 5 relating to the protrusions required that they lock in, or engage, the closed end of the cover in some way when the candle tin was configured as described in the claims, i.e., with the candle holder resting on top of the cover. The court reasoned that because not all of the figures in the patent showed the feet on the bottom of the candle holder fitting into recesses in the closed end of the cover when the candle was in this configuration, the term “to seat” did not require an engagement between the holder and the cover.

On June 28, 2006, the district court denied Limited’s motion for summary judgment of anticipation because a genuine issue of material fact existed regarding whether a cover was inherently disclosed in the prior art, specifically in U.S. Patent 6,398,544 (“Wright”). The court also denied Limited’s motion for summary judgment of obviousness. The court found that Limited had proven that “all of the elements of claims 1 and 5 in the '969 [pjatent are found in the prior art” encompassed by Wright and U.S. Patent 3,285,694 (“Mar-chi”). Infringement Opinion, No. 05-CV-3684, slip op. at 11. However, the court rejected Limited’s argument — that the motivation to combine was “self-evident” because “the prior art seeks to solve the same problem” of scorching caused by the candle holder — as failing to provide clear and convincing evidence of a motivation to combine the prior art. Id. at 11-12. The court stated that Limited had “simply supplied prior art containing the elements of claims 1 and 5 of the '969 [pjatent and used conclusory statements in lieu of an explanation of the motivation to combine the sources they have alleged.” Id. at 12.

In the same decision, the district court granted BASC’s motion for summary judgment of infringement. The court stated that the language of claims 1 and 5 supported a finding that the candle tin need only have “a cover that is simply capable of being placed over the open end of the candle holder and also used as a base for the holder, rather than at all times being placed in those positions.” Id. at 17.

Two days later, on June 30, 2006, the district court issued a sua sponte order declaring that the '969 patent was “valid” as a matter of law “based upon the reasons stated” for denying Limited’s summary judgment motion of invalidity in the Infringement Opinion. Validity Motion, No. 05-CV-3684, slip op. at 1, 2006 WL 6178978. The court found that “no reasonable trier of fact could find other than that the Plaintiffs patent is valid.” Id.

On August 16, 2006, the district court denied a motion by Limited for leave to file a supplemental motion for summary judgment of indefiniteness. After both parties submitted summary judgment briefing on damages, the court denied the motions. On June 22, 2007, after receiving briefing on the impact of the Supreme Court’s decision in KSR International Co. v. Teleflex Inc., 550 U.S. 398, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007), on the prior ruling of patent validity, the district court reaffirmed its earlier determination that Limited had failed to provide an adequate motivation to combine the prior art. In its docket entry, the court quoted KSR as stating that the analysis of a motivation to combine “should be made explicit.” Ball Aerosol & Specialty Container, Inc. v. Limited Brands, Inc., No. 2:05-CV-3684, slip op. at 1-2 (N.D.Ill. June 22, 2007) (document 191) (“KSR Analysis Order”) (quoting KSR, 127 S.Ct. at 1741). Because the district court had based its rejection of Limited’s obviousness argument in the Infringement Opinion on a finding that Limited used “conclusory statements,” the court reaffirmed its determination that “no reasonable trier of fact could find other than” that the '969 patent was “valid.” Id.

On September 4, 2007, the district court granted BASC’s motion for summary judgment on damages and determined, also on summary judgment, that Limited had willfully infringed the '969 patent. The court awarded BASC a reasonable royalty and enhanced damages. On March 27, 2008, the court denied Limited’s motion for reconsideration in its entirety by again concluding, inter alia, that the court’s previous finding of patent validity was a proper application of the clear and convincing standard, and consistent with KSR. The court also found that its finding of willful infringement was consistent with In re Seagate Techology, LLC, 497 F.3d 1360 (Fed.Cir.2007).

On April 23, 2008, Limited timely appealed the district court’s claim construction and grants of summary judgment on the issues of patent validity, infringement, and damages. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

A. Validity

1. Claim Construction

As a preliminary matter, we first determine whether the district court properly construed the term “to seat” to mean “to either rest on or fit into the cover,” thus not requiring any engagement between the candle holder and the cover. Claim Construction Opinion, 2006 WL 1049581, at *2. We review claim construction de novo. Phillips v. AWH Corp., 415 F.3d 1303, 1328 (Fed.Cir.2005) (en banc).

Limited argues that the district court’s construction is inconsistent with the text, context, and history of claims 1 and 5. Limited asserts that every figure in the '969 patent shows an engagement between the candle holder and the cover. In response, BASC states that the ordinary and customary meaning of “to seat” is “to rest on.” BASC contends that there was no clear disavowal in the '969 patent or its prosecution history of the embodiment shown in figure 1C, which shows the feet merely resting upon the cover. BASC also argues that the principle of claim differentiation dictates the construction given by the district court because claim 2, which is dependent on claim 1, expressly requires engagement with the cover.

We agree with BASC that the district court did not err in construing the term “to seat” as not requiring an engagement between the feet and the cover. The relevant portions of claims 1 and 5 are identical: “protrusions formed on the closed end of the holder and extending therefrom, the protrusions resting upon the closed end of the cover to seat the holder on the cover.” '969 patent col.5 11.54-56; id. col.6 11.27-30. This language makes clear that the protrusions, or feet, are what cause the candle holder to be “seatfed]” on the cover. Thus, Limited’s argument that every figure in the '969 patent shows an engagement between the candle holder and the cover misses the point because even if engagement were required, the claim lan-

990 555 FEDERAL REPORTER, 3d SERIES guage dictates that the engagement would be between the feet and the cover. Similarly, Limited’s argument regarding the prosecution history of the '969 patent is unpersuasive. The language regarding the protrusions was added to claims 1 and 5 to overcome a rejection based on prior art that depicted a candle holder that could lock together with its cover when the cover was used as a base. Nothing in the language added concerning the protrusions indicates that BASC intended the feet to lock into the cover; rather, the language indicates an intent to distinguish BASC’s claimed invention from the prior art by the presence of feet on the bottom of the candle holder. Furthermore, “claims must be read in view of the specification, of which they are a part.” Phillips, 415 F.3d at 1315 (internal quotation marks and citation omitted). Figure 1 C clearly depicts the feet merely resting atop the cover, in contrast to figure 5B, which depicts the feet locking into recesses in the cover. In addition, claim 2 specifically requires some engagement between the feet and a recess in the cover. See '969 patent col.5 1.57-col.6 1.2 (“The candle tin of claim 1 in which the closed end of the cover has a recess formed therein for seating the protrusions, there being a gap formed between the cover and holder when the holder is seated on the cover.”). Thus, because the specification illustrates feet both resting on the cover and locking into recesses in the cover, and also in light of the prosecution history, we conclude that the correct construction of the term “to seat” does not require an engagement between the feet and the cover. 2. Obviousness [3] On appeal, Limited argues that the district court erred in declaring, sua sponte, that the '969 patent was “valid.” Limited claims that BASC never moved for a determination of validity, nor did the court put Limited on notice that the patent might be declared “valid” without trial. As a result, Limited argues, the court precluded Limited from presenting its pled defense of indefiniteness and having factual questions of inherency relating to its anticipation defense decided by a jury. Substantively, Limited asserts that claims 1 and 5 of the '969 patent would have been obvious under KSR. Limited states that all the claim limitations of claims 1 and 5 and information as to how to configure these elements are in the prior art. Limited argues that the '969 patent would have been obvious to a person of ordinary skill in the art attempting to address the problem of scorching. Thus, Limited contends that under the reasoning of KSR with respect to any motivation to combine, the district court erred as a matter of law in failing to find claims 1 and 5 of the '969 patent obvious. BASC responds that granting summary judgment sua sponte is within the district court’s discretion and that the court recognized that BASC had simply overlooked formally moving for a validity determination. BASC argues that Limited was on notice and had an opportunity to respond regarding the issue of validity because its summary judgment motion for a declaration of invalidity was under consideration. Furthermore, BASC asserts that even if notice had been lacking, Limited suffered no prejudice because it failed to present any additional evidence of a viable claim for invalidity. BASC also states that the court properly exercised its discretion in determining that Limited had waived its indefiniteness defense because of evasive and untimely filings and notes that Limited had argued that there was no genuine issue of material fact, including any relat-

ing to inherency, in its failed summary judgment motion on anticipation.

With respect to obviousness, BASC argues that the district court applied KSR correctly. BASC asserts that the cited references provided other solutions for the scorching problem and thus taught away from combining references in the manner described in the '969 patent. BASC further contends that the commercial success of its candle tin and the fact that no prior art contained the claimed limitations for the required shapes and configuration of the candle tin further support a finding of nonobviousness.