United States: The Ordinary Meaning Of "Connected To" Encompasses Indirect Linkages

In Douglas Dynamics, LLC v. Buyers Products Co., Nos. 11-1291, 12-1046, -1057, -1087, -1088 (Fed. Cir. May 21, 2013), the Federal Circuit reversed the SJ of noninfringement of U.S. Patent No. Re. 35,700 ("the '700 patent"), reversed the denial of a permanent injunction against continued infringement of U.S. Patent No. 6,944,978 ("the '978 patent"), instructed the district court to enter a permanent injunction, and vacated and remanded the award of an ongoing royalty for both U.S. Patent No. 5,353,530 ("the '530 patent") and the '978 patent.  

Douglas Dynamics, LLC ("Douglas") owns the '700 patent, directed to a snowplow assembly that is mountable on a vehicle and removed as a single unit, and the '978 and '530 patents, directed to components of the '700 patent.  Douglas filed suit against Buyers Products Co. ("Buyers"), alleging Buyers' snowplows infringe the '700 patent.  Claims 1 and 38 of the '700 patent contain essentially parallel claim language, which recite, among other things, "a lift frame supported by [an] A-frame." Because Buyer's snowplow assemblies have the lift frame supporting the A-frame—the opposite of the claimed configuration in claims 1 and 38—the district court granted SJ of noninfringement.

Claim 45 of the '700 patent, however, does not require that the lift frame (also referred to as a "support frame") be supported by the A-frame.  Claim 45 recites "a mounting frame . . . located generally behind the bumper, a snowplow blade assembly including an A-frame and a snowplow blade fixed to the A-frame, a support frame connected to the A-frame, and wherein the A-frame and the support frame are connected to the mounting frame for pivotable movement . . . . "  Slip op. at 5.  The district court construed this limitation of claim 45 to require that the A-frame and the support frame each be directly connected to the mounting frame.  In Buyers' accused products, the A-frame is not connected directly to the mounting frame, but instead connects to the support frame, which in turn connects to the mounting frame.  The district court reasoned that simply reciting a connection between the support frame and the mounting frame would necessarily imply an indirect connection between the A-frame and the mounting frame.

"Simply because a patentee manages to maintain a profit in the face of infringing competition does not automatically rebut a case for irreparable injury.  Irreparable injury encompasses different types of losses that are often difficult to quantify, including lost sales and erosion in reputation and brand distinction."  Slip op. at 10-11.

On appeal, the Court held that "[t]he district court erred by reading claim 45 narrowly to encompass only those connections between the A-frame and the mounting frame specifically described in the specification."  Id. at 8.  Holding that the district court's construction would exclude a preferred embodiment of the invention, the Court found that an included figure "depicts the lift frame connected to the mounting frame not 'directly,' but via an intermediate removable hitch arm."  Id.  The Court further reasoned that claim 45 recites "functional requirements for the connection between the mounting frame and the A-frame/support frame unit," which could be met by connecting either the A-frame or the support frame, or both, to the mounting frame in the appropriate manner.  Id. at 9.  Accordingly, the Court reversed the grant of SJ of noninfringement of claim 45 of the '700 patent and directed the district court to enter SJ of infringement in favor of Douglas. 

Turning to the '530 and '978 patents, on appeal, Buyers conceded validity and infringement, but contended the district court properly denied a permanent injunction based on a three-pronged argument: (1) Buyers does not "directly compete" with Douglas because "persons willing to pay for a Douglas snowplow were unlikely to purchase a Buyers snowplow as a substitute"; (2) Douglas's market share increased about 1% a year after Buyers introduced its infringing snowplows, thus no harm was suffered; and (3) the public interest is better served having a new competitor selling cheaper snowplow assemblies.  Id. at 9-13.  Holding "profit in the face of infringing competition does not automatically rebut a case for irreparable injury," the Court concluded that Buyers does compete with Douglas.  Id. at 10.  The Court further noted, "The district court also made a clear error of judgment in its analysis of Douglas's reputation loss," because "Douglas's reputation would be damaged if its dealers and distributors believed it did not enforce its intellectual property rights."  Id. at 11-12.  Noting that a "new 'competitor' will often find it easier to avoid the costs and risks of research and development and just 'compete' by infringement," the Court added, "the public has a greater interest in acquiring new technology through the protections provided by the Patent Act than it has in buying 'cheaper knock-offs.'"  Id. at 13-14.  Accordingly, the Court reversed the district court's denial of a permanent injunction against continued infringement of the '978 patent, the '530 patent having expired while the present case was on appeal.

Finally, addressing the reasonable royalty rate, the Court held that "the district court clearly erred by ensuring the ongoing royalty rate it awarded would 'leave some room for profit' by Buyers at its current prices," because "the court abused its discretion by applying the infamous 25% rule of thumb" (referring to the holding in Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1317 (Fed. Cir. 2011)).  Id. at 14.  The Court held that the district court "clearly erred by limiting the ongoing royalty rate based on Buyers's profit margins," because an infringer's net profit margin is not the ceiling by which a reasonable royalty is capped, and the infringer can raise the selling price to accommodate a higher royalty rate.  Id.  Accordingly, the Court vacated and remanded the award of an ongoing royalty for the '530 and '978 patents.

Dissenting, Judge Mayer would have affirmed the district court's denial of a permanent injunction and holding of noninfringement of claim 45 of the '700 patent.  In his view, Douglas failed to meet the prerequisites for injunctive relief set forth in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006), and he noted there was not "any reliable evidence establishing that money damages were inadequate to redress Douglas' injury."  Mayer Dissent at 4.  Judge Mayer also agreed with the district court's analysis of claim 45 of the '700 patent, rejecting the interpretation that "the A-frame and the mounting frame are 'connected' to each other because they are both attached to a third part."  Id. at 7.
Noting that "the specification discloses only direct connections between the A-frame and the mounting frame," Judge Mayer believed that the inventors used the word "connected" when they wished to describe two parts that were directly attached to each other.  Id.

This article previously appeared in Last Month at the Federal Circuit, June 2013

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