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Meyer Intellectual Properties Limited v. Bodum

August 15, 2012

MEYER INTELLECTUAL PROPERTIES LIMITED AND MEYER CORPORATION, U.S., PLAINTIFFS-APPELLEES,
v.
BODUM, INC., DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Northern District of Illinois in case no. 06-CV-6329, Judge Milton I. Shadur.

The opinion of the court was delivered by: O'malley, Circuit Judge.

Before DYK, MOORE, and O'MALLEY, Circuit Judges.

Opinion for the court filed by Circuit Judge O'Malley.

In this patent case, Meyer Intellectual Properties Limited and Meyer Corporation, U.S. (collectively, "Meyer") filed suit against Bodum, Inc. ("Bodum") in the United States District Court for the Northern District of Illinois, alleging that Bodum infringed two of Meyer's patents, both of which are directed to a method for frothing milk: U.S. Patent Nos. 5,780,087 ("the '087 Patent") and 5,939,122 ("the '122 Patent") (collectively, "the patents-in-suit"). Bodum counterclaimed for declaratory judgment of noninfringement and invalidity.

The district court granted Meyer's motions for summary judgment that Bodum's products infringed the patents-in-suit. Before proceeding to trial, the district court granted Meyer's motions in limine prohibiting Bodum from: (1) introducing and relying on certain prior art; (2) presenting certain testimony relating to that prior art; and (3) introducing any evidence to support its inequitable conduct claims. The jury returned a verdict in favor of Meyer, finding that the patents-in-suit were not proven to be invalid, finding that Bodum's infringement was willful, and awarding Meyer damages in the amount of $50,000. The district court subsequently denied Bodum's post-trial motions for judgment as a matter of law ("JMOL") and granted Meyer's motion requesting enhanced damages and attorney fees.

Bodum appeals from the district court's final judgment awarding damages and attorney fees to Meyer in the amount of $906,487.56. Judgment, Meyer Intellectual Props. Ltd. v. Bodum, Inc., No. 06-cv-6329 (N.D. Ill. Feb. 16, 2011), ECF No. 237. On appeal, Bodum challenges several of the court's rulings. Specifically, Bodum challenges the district court's decisions: (1) granting summary judgment in favor of Meyer on infringement; (2) granting Meyer's motions in limine precluding Bodum from presenting certain prior art and testimony at trial; (3) denying Bodum's motion for JMOL that Bodum did not willfully infringe the patents-in-suit; (4) enhancing damages and awarding attorney fees in Meyer's favor; and (5) denying Bodum's renewed motion for JMOL and motion to alter the court's infringement decisions. For the reasons explained below, we reverse-in-part, vacate-in-part, and remand.

Circuit Judge Dyk concurs.

BACKGROUND

A. Factual Background

1. The Patents-in-Suit

Frank Brady ("Brady") is the sole inventor of the '087 and '122 Patents. For approximately ten years, from 1986 to 1996, Brady was an independent sales representative for Bodum, a company that designs and sells housewares products, including coffee makers, milk frothers, and other kitchen products. Tr. of Proceedings held on Nov. 12, 2010, Meyer Intellectual Props. Ltd. v. Bodum, Inc., No. 06-6329 (N.D. Ill. Apr. 29, 2011), ECF No. 268 at 683:14-23. In that capacity, and as the Chief Executive Officer of Brady Marketing Company, Inc., Brady marketed and sold a number of Bodum's household products, including Bodum's French press coffee makers. Brady explained that he first conceived of a frother using aeration instead of steam in the mid-1990s, and that he introduced it for sale at a trade show in May 1996. Tr. of Proceedings held on Nov. 10, 2010, Meyer Intellectual Props. Ltd. v. Bodum, Inc., No. 06-6329 (N.D. Ill. Apr. 29, 2011), ECF No. 267 at 466:3-467:2. Around that same time, Brady began selling his frothers through his company BonJour, Inc. ("BonJour").

On September 23, 1996, Brady filed a patent application directed to a "Method for Frothing Liquids." That application became the '087 Patent, which issued on July 14, 1998. During prosecution of the application that resulted in the '087 Patent, the PTO examiner initially rejected Claim 1 as anticipated by a prior art reference: U.S. Patent No. 5,580,169 ("the Ghidini Patent"). In response, Brady amended the claim to provide: (1) a dimensional limitation requiring that the container have a height that is at least two times the diameter; and (2) a plunger with a screen and a spring, where the spring is "positioned about the circumference of the plunger body such that the spring is biased to hold the screen in place in contact with, though not sealably connected to, the container." With these changes, Claim 1 of the '087 Patent was allowed.

While the application that resulted in the '087 Patent was pending, Brady filed a continuation application that later became the '122 Patent. The '122 Patent issued on August 17, 1999.

The patents-in-suit, which share a common specification, are directed to a method for frothing liquids such as milk. Specifically, the patents relate to "an apparatus and method for frothing, which allows the user to obtain foamy, frothed milk without the use of a complicated steamer device." '087 Patent col.1 ll.5-10; '122 Patent col.1 ll.8-12.*fn1 The "Background of the Invention" explains that, at the time the application was filed, "[m]ost of the prior art foaming devices [were] complicated machines which involve the use of steam to aerate or foam the liquid." '087 Patent col.1 ll.12-15. The background section concludes with the statement that, "[w]hat is needed, and is lacking in the prior art, is a device to froth liquids, such as milk, which is simple to use, has no need for electricity or steam, and is relatively easy to clean and store." Id. at col.1 ll.64-67.

Generally speaking, the claims disclose four steps:

(1) providing a container that has a height to diameter aspect ratio of 2:1; (2) pouring liquid (e.g., milk) into the container; (3) introducing a plunger that includes at least a rod and plunger body with a screen; and (4) pumping the plunger to aerate the liquid. '087 Patent col.5 ll.20 -- col.6 ll.8.

2. Bodum's Accused Products

Meyer accuses three of Bodum's milk frothers of infringement: (1) the Chambord Frother Model No. 1964; (2) the Aerius Frother Model No. 1364; and (3) the Shin Bistro Frother Model No. 10492. Bodum began selling a first generation of accused milk frothers -- referred to as the Version 1 frothers -- in 1999. The Version 1 frothers departed from Bodum's previous non-electric milk froth-ers in that: (1) the carafe was taller and thinner; and (2) the plunger had a different construction involving a mesh and spring design. The following images show a comparison between Bodum's Version 1 Chambord Frother and the Figures from Meyer's '087 Patent:

B. Procedural History

In May 2005, Brady sold his company -- BonJour -- to Meyer. In the sale, BonJour transferred its intellectual property rights to Meyer, and it is undisputed that Meyer owns the patents-in-suit.

On November 20, 2006, Meyer filed suit against Bodum in the Northern District of Illinois, alleging infringement of the patents-in-suit. In the Complaint, Meyer alleged that Bodum "has been and still is using, selling, offering for sale and/or importing one or more milk frother products for frothing liquids that infringe, directly, indirectly, contributorily and/or by inducement" the '087 Patent and the '122 Patent. Complaint, Meyer Intellectual Props. Ltd. v. Bodum, Inc., No. 06-cv-6329 (N.D. Ill. Nov. 20, 2006), ECF No. 1. Meyer amended its complaint a year later, in November 2007, to add a claim for willful infringement.

On January 19, 2007, Bodum: (1) filed an answer asserting an affirmative defense of inequitable conduct; and (2) counterclaimed seeking a declaration that the asserted claims of the patents-in-suit are invalid and not infringed.

Roughly six months after it was served with the complaint, Bodum ceased manufacturing its Version 1 froth-ers and transitioned to Version 2 frothers with a new plunger design. Bodum did not change the name or designation of its frother products. According to Bodum, "[u]nlike the Version 1 plunger, the Version 2 plunger does not have a spring or other biasing element that holds the screen against the inside wall of the container or housing, and the screen does not extend beyond the diameter of the plunger plate." Appellant Br. 9. Instead, the Version 2 plunger contains an O-ring around the circumference of the plunger body. Bodum subsequently removed the O-ring from the Version 2 frother and began selling the new design as Version 3 in July 2008.

1. Claim Construction

On May 14, 2008, the district court issued its claim construction order. Meyer Intellectual Props. Ltd. v. Bodum, Inc., 552 F. Supp. 2d 810 (N.D. Ill. 2008) ("Claim Construction Order"). In that order, the court noted that the parties "agree[d] on which claims are in dispute and have submitted a joint letter identifying the disputed language." Id. at 812. Consistent with the parties' request, the court limited its construction to certain language in Claim 1 of the '087 Patent and Claims 1 and 10 of the '122 Patent. The bulk of the court's claim construction order is not relevant to resolution of this appeal so we do not discuss it in any detail. Notably, however, the parties did not ask the court to construe the phrase "providing a container" as it is used in Claim 1 of the patents-in-suit at this stage of the proceedings. See '087 Patent col.5 ll.23-25 ("providing a container characterized by a height and a diameter, the height being at least two times the diameter").

2. Summary Judgment

On September 2, 2008, Meyer moved for partial summary judgment, arguing that, by providing its Version 1 frothers along with instructions for their use, Bodum induced others -- specifically Meyer's own expert Albert Karvelis -- to infringe the patents-in-suit. In response, Bodum argued that: (1) Meyer failed to provide sufficient evidence of an intent to induce infringement; (2) Bodum could not induce infringement because it believed in good faith that the Meyer patents are invalid; (3) Bodum could not be liable for inducement because no single third party could perform all the steps in the patented claims, not even Mr. Karvelis; and (4) even if Mr. Karvelis had performed all of the steps of the method claims, his acts could not be acts of "infringement" since he was acting under an implied license created by the umbrella of the parties' litigation.

Two things are notable about the parties' summary judgment filings. First, Meyer presented no evidence that anyone other than its own expert had directly "infringed" the '087 and '122 Patents. Second, both parties discussed what it meant to "provide a container" for frothing though, again, neither expressly sought construction of that term.

On February 11, 2009, the district court granted Meyer's motion for partial summary judgment, finding that Bodum had induced infringement of certain claims in the '087 and '122 Patents by its sales of the Version 1 frothers. Meyer Intellectual Props. Ltd. v. Bodum, Inc., 597 F. Supp. 2d 790 (N.D. Ill. 2009) ("Summary Judgment Version 1").

Meyer then filed a second motion for partial summary judgment, this time arguing that Bodum's sale of its Version 2 and 3 frothers both directly infringed and induced infringement of the '122 Patent.*fn2 The court granted summary judgment of direct infringement and inducement as to the Version 2 frothers, but found genuine issues of material fact as to literal infringement with respect to the Version 3 frothers. Meyer Intellectual Props. Ltd. v. Bodum, Inc., 674 F. Supp. 2d 1015, 1022 (N.D. Ill. 2009) ("Summary Judgment Version 2"). The court began by noting that the '122 Patent includes a limitation that "substantially no liquid passes between the circumference of the plunger body and the inside wall of the container." Id. at 1017. Although Bodum attempted to design around this limitation by removing the O-ring from the Version 2 frother so that a greater amount of liquid could pass between the plunger and the container, Bodum "mistakenly produced and sold frothers with O-rings ("Version 2 frothers") during a period that began about July 2007 and ran through June 2008." Id.

Bodum argued that it could not be liable for infringement because Meyer did not offer evidence that Bodum itself performed each step of the method and Meyer offered no evidence that its customers did so. The court rejected this argument and reiterated its view that, if Meyer's patents are valid, Bodum's production and sale of the Version 2 frothers infringe directly and induce others to infringe.

3. Motions in Limine

In April 2010, Meyer filed several motions in limine. Specifically, Meyer sought to: (1) bar Bodum's proffered expert, Robert John Anders ("Anders"), from testifying regarding his opinion that the patents-in-suit are invalid as obvious under 35 U.S.C. § 103; (2) prevent Bodum from relying on evidence it claims constitutes prior art, including documents Anders referred to in his report; (3) preclude Bodum from presenting any evidence regarding its inequitable conduct defense; and (4) prevent Bodum from introducing what Meyer characterized as previously undisclosed prior art references.

In a series of decisions, the district court granted all of Meyer's motions, limiting significantly the evidence Bodum could introduce at trial. First, the court issued an order excluding Anders' opinion on obviousness and preventing him from testifying on that subject because he "advance[d] his opinion as a mere ipse dixit: 'Trust me -- I know obviousness when I see it, and this is it.'" Meyer Intellectual Props. Ltd. v. Bodum, Inc., 715 F. Supp. 2d 827, 830 (N.D. Ill. 2010).

Next, the district court issued an order barring Bodum from using prior art evidence not contained in Anders' report. Meyer Intellectual Props. Ltd. v. Bodum, Inc., No. 06-cv-6329, 2010 U.S. Dist. LEXIS 56168 (N.D. Ill. June 7, 2010). Looking at Anders' report, the court found that it was divided into three sections -- A, B, and C -- and that, although Anders identified fifty-six items in Part A "as matters that [he] reviewed en route to his arrival at the opinions that he then sets out in Parts B and C," his "ensuing opinions themselves focused solely on just two of those many items as the actual predicates for his stated conclusions." Id. at *4. In other words, the court found that Anders limited the universe of prior art and that Bodum's lawyers could not expand that scope. Finally, the court granted Meyer's motion to preclude Bodum from arguing that Brady engaged in inequitable conduct in obtaining the patents-in-suit. Specifically, the court found that Bodum's "inequitable conduct charge . . . failed to meet the demanding requirements" of materiality and intent. Id. at *6-9.

Bodum moved the court to reconsider both of its orders granting Meyer's motions in limine. In relevant part, Bodum argued that: (1) during discovery, Bodum identified and disclosed much of the contested prior art in its Second Supplemental Answers to Plaintiffs' Interroga-tories 2 and 3; (2) it was improper for the court to use the Anders' report to limit the scope of prior art upon which Bodum could rely at trial; (3) the Anders' report is a single report with three component parts which should be read together; and (4) even if Bodum were limited to the references upon which Anders expressly relied, those references included a drawing of a Bodum French press container with dimensions which matched those disclosed in Meyer's '122 Patent.

In a decision dated October 7, 2010, the court denied Bodum's motion to reconsider. First, the court reiterated that Anders "considered a great deal of potentially relevant material and, having done so, settled on just two items as the relevant prior art." Meyer Intellectual Props. Ltd. v. Bodum, Inc., No. 06-cv-6329, 2010 U.S. Dist. LEXIS 107169, at *3 (N.D. Ill. Oct. 7, 2010). Second, the court stated that:

It simply will not do for Bodum to take an end run around its own chosen expert's opinion by adducing testimony from its own people, Jorgen Bodum and Thomas Perez, as to other items that they consider prior art, whether that testimony is ten- dered under the rubric of Evid. R. 702 (the rule governing "expert" testimony) or of Evid. R. 701 (the rule that gives room for opinion testimony by lay witnesses).

Id. Accordingly, the court limited Bodum to only two of the references identified in Anders' report: (1) United States Reissued Patent, No. RE37,137 ("the Ghidini Reissue Patent"); and (2) a Bodum French Press container.

4. Jury Trial

Beginning on November 8, 2010, the court conducted a jury trial to address three issues: (1) invalidity based on obviousness; (2) whether Bodum's infringement of the asserted claims was willful; and (3) damages.

On November 10, 2010, near the end of Meyer's case-in-chief, Meyer moved the court to preclude Bodum from introducing and using a modern version of the Bodum 3-Cup French Press as prior art on grounds that: (1) Bodum had no corroborating evidence tying the modern version to that which allegedly pre-dated the Meyer patents; and (2) it was an attempt to backdoor the court's prior rulings limiting the prior art on which Bodum could rely. The district court granted the motion on the second ground, and the Bodum 3-Cup French Press was not introduced as an exhibit at trial.

Also at the end of Meyer's case-in-chief, Bodum filed a motion for JMOL that it did not willfully infringe the asserted patents. The district court denied that motion on the record on November 15, 2010.

On November 17, 2010, the jury returned a verdict in favor of Meyer, finding that the patents-in-suit were not invalid and that Bodum's infringement was willful. The jury awarded ...


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