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Recent Cases
United States Court of Appeals
for the Federal Circuit
04-1291
ON-LINE
TECHNOLOGIES, INC.,
Plaintiff-Appellant,
v.
BODENSEEWERK
PERKIN-ELMER GMBH,
PERKIN-ELMER
CORP., PERKIN-ELMER INC.,
SICK UPA
GMBH, and SICK, A.G.,
Defendants-Appellees.
Gabriel Berg, Berg & Androphy, of New York, New York, argued for plaintiff-appellant.
Edward
T. Colbert, Kenyon & Kenyon, of Washington, DC,
argued for defendants-appellees.
With him on the brief was C. Kyle Musgrove. Of counsel on the brief were Francis
H. Morrison III and Jonathan B. Tropp, Day, Berry & Howard
LLP, of Hartford, Connecticut.
Appealed from: United States District Court for the District of Connecticut
Judge Janet Bond Arterton
United States Court of Appeals for the Federal Circuit
04-1291
ON-LINE TECHNOLOGIES, INC.,
Plaintiff-Appellant,
v.
BODENSEEWERK PERKIN-ELMER GMBH,
PERKIN-ELMER CORP., PERKIN-ELMER INC.,
SICK UPA GMBH, and SICK, A.G.,
Defendants-Appellees.
___________________________
DECIDED: October 13,
2004
___________________________
Before
MICHEL, Circuit Judge, ARCHER, Senior Circuit Judge, and
BRYSON, Circuit Judge.
BRYSON, Circuit Judge.
The
dispute in this case involves a device known as a long-path gas cell, which
is used in an infrared spectrometer to determine the composition of gases
such as emissions from industrial plants. The spectrometer captures the gas to
be tested and directs a beam of infrared light through the chamber
containing the gas. After the
light has passed through the chamber, a detector measures the absorption of
the light, from which the properties of the gas can be determined.
It has
long been understood in the art that lengthening the light path in the gas
cell chamber can result in a more accurate absorption reading. One problem encountered in long-path
gas cells, however, was that over the long path created by multiple
reflections of the light beam within the chamber, the quality of the beam
would become degraded, primarily because of astigmatism induced by the
mirrors used in the system.
Astigmatism is an optical aberration created when an optical element
or system has a different focal length in each of two orthogonal
planes. K.D. Moeller, Optics
448 (1988); H.P. Brueggemann, Conic Mirrors 15 (1968).
In 1995,
appellant On-Line Technologies, Inc., obtained a patent, U.S. Patent No.
5,440,143 (“the ’143 patent”), on a method for increasing
the length of the light path in a gas cell while correcting for astigmatism
and thereby reducing the diffusion of the beam of light. On-Line subsequently brought an
action in the United States District Court for the District of Connecticut
against a group of related parties, Bodenseewerk Perkin-Elmer GmbH;
Perkin-Elmer Corp.; Perkin-Elmer Inc.; Sick UPA GmbH; and Sick, A.G.
(collectively, “Perkin-Elmer”). On-Line Techs., Inc. v.
Bodenseewerk Perkin-Elmer GmbH,
No. 3:99CV2146 (D. Conn. filed Nov. 3, 1999).
In its
complaint, On-Line alleged that Perkin-Elmer had made, used, and sold a
device that infringed the ’143 patent. In addition, On-Line asserted
several state law claims, including misappropriation of trade secrets,
violation of the state law of unfair competition, breach of contract, and
fraud. In support of the state
law claims, On-Line alleged that, pursuant to a nondisclosure agreement, it
had revealed its gas cell design to Perkin-Elmer scientists in anticipation
of a possible business arrangement between the companies relating to
On-Line’s device. Rather
than pursuing a joint enterprise, however, Perkin-Elmer allegedly copied
what it had learned from On-Line and incorporated the disclosed technology
into its commercial product, thus breaching the nondisclosure agreement and
violating the state law prohibitions against unfair competition, theft of
trade secrets, and fraud.
After
discovery, the district court disposed of the patent infringement claim by
granting summary judgment of noninfringement. The court also granted summary
judgment in favor of Perkin-Elmer on all of On-Line’s state law
claims, finding that On-Line had failed to show that there was a disputed
issue of material fact with respect to any of those claims. Finally, the court dismissed one of
the defendants, Sick, A.G., for lack of personal jurisdiction. On-Line appeals all three aspects of
the judgment.
I
The
district court’s grant of summary judgment of noninfringement as to
claim 1 of the ’143 patent was premised on the court’s claim
construction. On-Line contends
that the district court erred in construing the claim and therefore erred
in entering summary judgment.
Claim 1
of the ’143 patent recites as follows (emphasis added):
A
folded-path radiation absorption gas cell comprising: an enclosure having
first and second ends, and defining a substantially closed chamber
therewithin; spaced input radiation and output radiation windows formed
through said first end of said enclosure and aligned on a first axis; a
concave reflective field surface extending at least partially between said
windows at said first end of said enclosure; a pair of substantially
spherical, concave reflective objective surfaces at said second end of
said enclosure disposed in confronting relationship to said field surface,
said objective surfaces being aligned side-by-side on an axis parallel to
said first axis and in optical registry with said windows, at least one
of said objective surfaces having a cylindrical component added thereto to
increase coincidence of focii in two orthogonal planes, thereby to
maximize the energy throughput characteristic of said cell; and means for
the introduction and withdrawal of gas into and from said chamber of said
enclosure.
The invention
to which claim 1 is directed is an improvement on a type of gas cell known
as a “White cell.”
A White cell uses several mirrors that are aligned to make the light
follow a long path as it passes through the test chamber. In the invention, two mirrors are
placed side by side at the opposite end of the main chamber from a third
mirror. A beam of light enters
the chamber and is repeatedly reflected off the three mirrors until it
reaches an exit point. Because
the mirrors reflect the light beam back and forth across the chamber
multiple times, the path of the beam is much longer than the distance from
one end of the chamber to the other.
The
’143 patent sought to address the problem of astigmatic diffusion of
the light beam passing through the cell. The solution proposed by the
’143 patent was to shape the secondary mirrors in a manner that would
counteract the astigmatism induced by reflections from the spherical
mirrors used in White cells and thus keep the beam of light focused during
its passage through the cell.
’143 patent, col. 4, ll. 52-62. To achieve that purpose, each claim
of the ’143 patent required the mirrors to have “substantially
spherical, concave reflective objective surfaces . . . at least one of said
objective surfaces having a cylindrical component added thereto to increase
coincidence of focii in two orthogonal planes . . . .” Id., col. 5, ll. 44-52; col. 6, ll. 14-22, 40-48.
On-Line
asserted that Perkin-Elmer’s commercial long-path gas cells infringed
claim 1 of the ’143 patent.
In particular, On-Line contended that Perkin-Elmer’s cells
used objective mirrors of the sort recited in the claim to correct for
astigmatism. In the district
court, Perkin-Elmer did not dispute that its accused gas cells used
objective mirrors shaped to correct for astigmatism. Perkin-Elmer argued, however, that
its objective mirrors had toroidal surfaces, not “substantially
spherical” surfaces “having a cylindrical component added thereto,”
as required by claim 1 of the ’143 patent. For that reason, Perkin-Elmer
argued, its gas cells were not within the scope of the patent, either
literally or under the doctrine of equivalents. In essence, Perkin-Elmer’s
argument was that a toroidal surface is different from a substantially
spherical surface with a cylindrical component added to it. Because On-Line not only did not
claim toroidal mirror surfaces but specifically omitted them from its
claims, Perkin-Elmer contended that On-Line had dedicated surfaces of that
shape to the public. The
district court agreed with Perkin-Elmer and held that Perkin-Elmer’s
toroidal surface was not covered by the ’143 patent.
In
explaining its claim construction ruling, the district court noted that the
specification described the contour of the spherical objective mirrors as
“approach[ing] toroidal.”
’143 patent, col. 4, ll. 8-12. The court stated that
“[b]ecause mirrors with a contour which only ‘approaches
toroidal’ cannot be said to be actual toroidal mirrors, toroidal
objective mirrors are not spherical objective mirrors with cylindrical
corrections.” In support
of that conclusion, the court cited extrinsic evidence, including testimony
from the inventors, which the court characterized as establishing that
“spherical objective mirrors with cylindrical corrections are not the
same as toroidal objective mirrors.” Because the court concluded that the
claim language excluded toroidal surfaces, the court held that
Perkin-Elmer’s gas cells did not literally infringe claim 1 of the
’143 patent. Moreover,
because the court concluded that toroidal surfaces were disclosed but not
claimed in the ’143 patent, the court invoked the principle that a
patentee’s disclosure of unclaimed subject matter bars application of
the doctrine of equivalents to that subject matter and held that On-Line
could not rely on the doctrine of equivalents to reach toroidal mirrors
such as Perkin-Elmer’s.
On
appeal, On-Line contends that the district court erred in ruling that
objective mirrors having a toroidal surface are not within the scope of claim
1 of the ’143 patent. We
agree with On-Line that, properly construed, the reference to a
“substantially spherical, concave reflective surface . . . having a
cylindrical component added thereto to increase coincidence of focii in two
orthogonal planes” defines a set of curved surfaces that includes a
toroidal surface. We reach that
conclusion because the specification makes clear that the claim language
referring to spherical surfaces with cylindrical components includes
toroidal surfaces.
A
toroidal (or toric) surface is defined as a surface that is
“generated if an arc is rotated about an axis which lies in the same
plane as the arc, but which does not pass through its centre of
curvature.” M. Jolie, The
Principles of Ophthalmic Lenses 31 (3d ed. 1977). The classic example of a toroid is
the shape generated when a circle is rotated about a line that does not
intersect the circle, which describes a torus, a figure resembling a
doughnut or tire. A toroidal
surface is the shape of a segment of the surface of a toroid. Id.
Although
the parties agree that the term “toroidal” has a
well-understood definition, neither party suggests that the term
“substantially spherical, concave reflective surface . . . having a
cylindrical component added thereto,” used in the claims of the
’143 patent, has a precise and well-established meaning in the
art. Rather, the evidence
before the trial court indicates that the reference to spheres and
cylinders is borrowed from thin lens theory, and that a lens characterized as
spherical with a cylindrical component is one with an optical function
achieved by “stacking” spherical and cylindrical lenses. The evidence shows that the same
nomenclature is sometimes used, albeit with some lack of precision, to
refer to reflective surfaces having similar optical properties to such
stacked lenses, even though reflective surfaces cannot be stacked in the
same manner as lenses.
Because
the phrase “substantially spherical . . . having a cylindrical
component added thereto” has no precise and generally understood
meaning in the art as applied to reflective surfaces, we look to the
intrinsic evidence, in this case the specification, for guidance as to the
meaning of that language as used in the patent. See Teleflex, Inc. v.
Ficosa N. Am. Corp., 299 F.3d 1313, 1324-25 (Fed. Cir. 2002)
(“The words used in the claim are interpreted in light of the
intrinsic evidence of record . . . .
The intrinsic evidence may provide context and clarification about
the meaning of claim terms.
‘Such intrinsic evidence is the most significant source of the
legally operative meaning of disputed claim language.’”
(citations omitted)); Genentech, Inc. v. Wellcome Found. Ltd., 29
F.3d 1559, 1563 (Fed. Cir. 1994) (“Since a definition of [the
critical claim] phrase cannot be extracted from the claims themselves, we
look to the specification for guidance.”); see also United
States v. Adams, 383 U.S. 39, 49 (1966) (“[C]laims are to be
construed in the light of the specifications and both are to be read with a
view to ascertaining the invention.”).
Although
in this case, as in others, “the guidance [in the specification] is
not provided in explicit definitional format,” Irdeto Access, Inc.
v. Echostar Satellite Corp., No. 04-1154, slip op. at 8 (Fed. Cir. Sept. 14,
2004), the specification
of the ’143 patent nonetheless demonstrates that the claim language
encompasses toroidal surfaces.
First, the specification refers to the curved surfaces in the
preferred embodiment of the invention as toroidal surfaces (“the
toroids of the surfaces 62, 64,” ’143 patent, col. 4, line 16),
and in doing so it describes those surfaces by using the same language that
is used in claim 1 (“generally spherical reflective surfaces,”
each of which “has a cylindrical component superimposed thereupon,”
id., col. 4, ll. 7-10).
Accordingly, the specification makes it clear that, for purposes of
the ’143 patent, a toroidal surface is a substantially spherical
reflective surface that has a cylindrical component superimposed thereupon.
Second,
even if the specification were less explicit in equating the term
“toroid” with a generally spherical surface having a
cylindrical component added thereto, the reference to the preferred
embodiment as having mirrors with toroidal surfaces would give rise to a very
strong inference that the claim should be construed to include such
surfaces. As this court has
explained before, “a claim interpretation that excludes a preferred
embodiment from the scope of the claim ‘is rarely, if ever,
correct.’” Globetrotter
Software, Inc. v. Elan Computer Group, Inc., 362 F.3d 1367, 1381 (Fed.
Cir. 2004), quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d
1576, 1583 (Fed. Cir. 1996); see also Int’l Rectifier Corp.
v. IXYS Corp., 361 F.3d 1363, 1371 (Fed. Cir. 2004); Modine Mfg. Co.
v. U.S. Int’l Trade Comm’n, 75 F.3d 1545, 1550 (Fed. Cir. 1990).
The
district court interpreted the reference in the specification to a
“contour that approaches toroidal,” ’143 patent, col. 4,
line 12, as indicating that the recited surface could include a surface
that approximates a toroidal shape, but could not include the toroidal
shape itself. We disagree with
that interpretation. From the
description of the mirror surfaces of the preferred embodiment as
“toroids” four lines later in the specification, we think it
clear that the words “approaching toroidal” were not meant to
exclude curves designed to be toroidal in shape, but simply to indicate
that the surfaces recited in the invention were intended to include all
curves that closely approximate toroidal, including a toroidal surface
itself. Indeed, as a matter of
manufacturing tolerances, it is impossible to make a real-world device with
a reflecting surface that is perfectly toroidal, just as it is impossible
to make a reflecting surface that is a perfect spheroid or a perfect
paraboloid. For that reason,
even mirrors that are designed to be toroidal, such as the mirrors in
Perkin-Elmer’s device, will necessarily merely “approach”
the ideal toroidal shape, although they may come very close. Accordingly, we do not agree with
the district court that the reference in the specification to a surface
that “approaches toroidal” was meant to exclude a device having
a surface that is characterized in the art of optical engineering as
“toroidal.”
Finally,
the patent describes the effect of adding a cylindrical component to a
generally spherical mirror as being “to reduce the effective radius
of curvature in one plane, thus enabling light incident on the reflective
surface to better approach the focus in the orthogonal plane,”
’143 patent, col. 4, ll. 60-62, and “to increase coincidence of
focii in two orthogonal planes,” id., col. 5, ll. 51-52. A toroidal surface “has two
principal radii of curvature corresponding to its two principal
curves,” M. Jolie, supra, at 31; see also Jurgen R. Meyer-Arendt, Introduction to Classical &
Modern Optics 120 (3d ed. 1989) (“A toric surface has two radii
of curvature (different in the two principal meridians)”); Daniel
Malacara, Optical Shop Testing 754 (2d ed. 1992). That characteristic makes toroidal
surfaces useful in counteracting astigmatism. See Eugene Hecht, Optics
211-12 (3d ed. 1998). Thus,
while the claim language in the ’143 patent does not either expressly
include a toroidal surface or exclude other similar surfaces, the
characteristics and function of the surface described in the specification
and the claims are consistent with the characteristics and function of a
toroidal surface.
The
district court relied on extrinsic evidence that the court interpreted as
supporting its claim construction.
Extrinsic evidence, however, cannot be used to alter a claim
construction dictated by a proper analysis of the intrinsic evidence. See Intel Corp. v. VIA
Techs., Inc., 319 F.3d 1357, 1367 (Fed. Cir. 2003) (“When an analysis of
intrinsic evidence resolves any ambiguity in a disputed claim term, it is
improper to rely on extrinsic evidence to contradict the meaning so
ascertained.”); Frank’s Casing Crew & Rental Tools, Inc. v. PMR
Techs., Ltd., 292 F.3d
1363, 1374 (Fed. Cir. 2002); Bell & Howell Document Mgmt. Prods. Co. v. Altek Sys., 132 F.3d 701, 706 (Fed. Cir.
1997). In any event, we do not agree with the district
court’s analysis of the extrinsic evidence.
Although
the evidence showed, and On-Line’s witnesses acknowledged, that the
mathematical description of a toroid differs from that of a spherocylinder,
On-Line offered evidence that a person of skill in fabricating optics would
understand the expression “sphere with cylindrical correction”
or a sphere “having a cylindrical component” to refer not to a
mathematical concept but to the type of optical correction obtained by
stacking thin lenses, one having a spherically curved surface and another
having a cylindrically curved surface.
According to On-Line’s expert, a person of ordinary skill in
the art would understand the term “sphere with cylindrical
correction,” as a way of describing the curved surfaces used in
On-Line and Perkin-Elmer’s commercial products, i.e., toroidal
surfaces. The evidence in the
summary judgment record therefore provides further support for
On-Line’s contention that the surface of the objective mirrors
recited in claim 1 of the ’143 patent includes toroidal surfaces, as
that term is understood by persons of skill in the pertinent art, as
opposed to the manner in which it is used by mathematicians.
To be
sure, On-Line’s inventors acknowledged that as a mathematical concept
a toroidal surface is not the same thing as a spherical surface with a
cylindrical component added to it.
That is not to say, however, that the inventors regarded toroidal
surfaces as falling outside the broader claim language, which referred to
“substantially spherical” surfaces “having a cylindrical
component added thereto.”
As On-Line’s expert explained, “the sphere/cylinder
convention does not specify the exact mathematical surface . . . . A person of ordinary skill in the
art would understand the term ‘sphere with cylindrical correction’
as a terse and natural way to describe the modestly curved surfaces of the
objective mirrors in On-Line’s or Perkin-Elmer’s gas cell [both
of which are toroidal].”
Moreover, while acknowledging that the mathematical definition of a
toroid differs from that of a spheric cylinder, co-inventor Robert
Carangelo testified that the claim language “substantially spherical
. . . having a cylindrical component added” includes a toroidal
surface. The other co-inventor,
David Wright, testified to similar effect, stating that the claim language
was intended to cover a range of conic sections, including ellipsoids and
toroids, all of which would have the same shape near the axis “to
within the order of machining tolerance.” Finally, even the technical article
on which Perkin-Elmer relies to demonstrate that there is a mathematical
distinction between toroidal and spherocylindrical surfaces points out that
the distinction is extremely subtle for most applications and that toroidal
surfaces “are sometimes also [referred to] as spherocylindrical
surfaces.” Carmen Menchaca & Daniel Malacara, Toroidal and
Spherocylindrical Surfaces, 25 Applied Optics 3008 (1986).
Because
of the lack of precision in the language used to define the claimed
surfaces of the objective mirrors, this case was made more difficult than
it needed to be, and the district court was required to invest considerable
effort in trying to ascertain the meaning of the critical claim
language. While the district
court conducted a careful analysis of the claim language in light of the
specification and the extrinsic evidence, we are nonetheless persuaded,
particularly in light of the specification, that the district court’s
claim construction was too restrictive and that a surface designed to be
toroidal is within the scope of claim 1 of the ’143 patent. Accordingly, because the summary
judgment of noninfringement was based on an erroneous claim construction,
we vacate the judgment of noninfringement and remand the case for further
proceedings on the remaining issues pertinent to On-Line’s claim of
infringement.
II
Invoking
the district court’s supplemental jurisdiction, On-Line raised a
number of state law claims, including claims that Perkin-Elmer had
misappropriated five trade secrets relating to On-Line’s gas cell, in
violation of the Connecticut Uniform Trade Secrets Act, Conn. Gen. Stat.
§ 35-50 et seq. (“CUTSA”). The district court concluded that no
reasonable jury could find that Perkin-Elmer had misappropriated any of
On-Line’s trade secrets.
On-Line challenges that ruling with respect to two of the trade secrets
that it alleges Perkin-Elmer misappropriated: the long-path gas cell and the
Norton igniter source.
A.
The
Long-Path Gas Cell Trade Secret Claim
In the district court,
On-Line alleged that Perkin-Elmer misappropriated confidential information relating
to the design of On-Line’s long-path gas cell. The district court ruled that
On-Line failed to prove actionable misappropriation because the information
at issue was disclosed in the ’143 patent and because On-Line failed
to point to any evidence that Perkin-Elmer had improperly used any
information relating to the gas cell prior to the issuance of the
patent. Based on the summary
judgment record, the district court concluded that undisputed evidence showed
that Perkin-Elmer did not begin to incorporate the features of
On-Line’s gas cell into its own product until 1996, after the
issuance of the ’143 patent.
Although On-Line referred to evidence regarding Perkin-Elmer’s
conduct before the issuance of the ’143 patent, the district court
held that none of that evidence was probative of misappropriation because
the conduct in question all constituted legitimate evaluation of
On-Line’s product pursuant to the nondisclosure agreement entered
into by On-Line and Perkin-Elmer in 1994. As to On-Line’s claim that not
all of the secrets relating to its gas cell were disclosed in the
’143 patent, the court found that claim to be unsupported by any
evidence.
After a patent has issued, the information contained within it is
ordinarily regarded as public and not subject to protection as a trade
secret. See Restatement (Third) of Unfair
Competition §
39 cmt. f (1995) (“Information that is generally known or readily
ascertainable through proper means . . . by others to whom it has potential
economic value is not protectable as a trade
secret. Thus, information that
is disclosed in a patent or contained in published materials reasonably
accessible to competitors does not qualify for protection [as a trade
secret].”); Conmar Prods.
Corp. v. Universal Slide Fastener Co., 172 F.2d 150, 155-56 (2d Cir. 1949) (L. Hand). Moreover, the nondisclosure
agreement in this case specifically provided that the obligation of
confidentiality created by the agreement “will not apply to any
information . . . which becomes publicly available other than by breach of
this agreement.”
Consequently, On-Line cannot claim that Perkin-Elmer’s
activities following the issuance of the ’143 patent constituted
misappropriation of confidential information unless the activities related
to information not disclosed in the patent.
In the district court, On-Line claimed that Perkins-Elmer had
misappropriated information relating to the design of the long-path gas
cell and had used it to build its own long-path gas cell prior to the
issuance of the ’143 patent.
The district court, however, concluded that the evidence to which
On-Line pointed did not create a genuine issue of material fact on that
issue, and we agree. As
characterized by the district court, the evidence showed that Perkin-Elmer
took various steps to evaluate the On-Line technology that it was
considering buying, but did not show that Perkin-Elmer began building its
own gas cell before 1996.
Although On-Line asserts that the evidence of Perkin-Elmer’s
course of conduct with respect to On-Line’s product shows that it
made use of On-Line’s gas cell trade secret before the issuance of
the ’143 patent, On-Line’s general characterizations do not
satisfy the requirement that it point to specific evidence sufficient to
create a disputed issue of material fact. See Celotex Corp. v.
Catrett, 477 U.S. 317, 324 (1986) (non-movant in summary judgment
proceedings must “designate specific facts showing that there is a
genuine issue for trial”); Crown Operations Int’l, Ltd. v.
Solutia Inc., 289 F.3d 1367, 1377 (Fed. Cir. 2002) (“non-moving
party must affirmatively demonstrate by specific factual allegations that a
genuine issue of material fact exists for trial”); S. Bravo Sys.,
Inc. v. Containment Techs. Corp., 96 F.3d 1372, 1376 (Fed. Cir. 1996)
(unsupported assertions do not satisfy requirement of designating specific
evidence creating a genuine issue of material fact).
We also reject On-Line’s argument that Perkin-Elmer’s
acts of copying and testing On-Line’s gas cell during the period
covered by the nondisclosure agreement were not authorized by the agreement
and therefore constituted misappropriation. As the district court noted, On-Line
did not present any evidence that Perkin-Elmer began to develop its own
cell during the period covered by the agreement or otherwise engaged in
conduct prohibited by the nondisclosure agreement. Instead, the evidence relating to
Perkin-Elmer’s conduct with respect to the disclosed technology shows
merely that Perkin-Elmer tested and evaluated that technology, which was
conduct contemplated by the nondisclosure agreement. Moreover, Robert Hoult, a
Perkin-Elmer scientist who visited On-Line’s facility following the
execution of the nondisclosure agreement, submitted an affidavit in which
he averred that he had learned nothing useful about On-Line’s gas
cell that was not already evident from On-Line’s nonconfidential
marketing brochure. On-Line did
not offer evidence to contradict Dr. Hoult’s representation. Because On-Line failed to
demonstrate a disputed issue of material fact with respect to the long-path
gas cell trade secret claim, we affirm the district court’s grant of
summary judgment on that issue.
B.
The Norton
Igniter Source Trade Secret Claim
On-Line’s
second trade secret claim is that Perkin-Elmer misappropriated the infrared
light source and assembly used in the On-Line spectrometer. On-Line uses a device known as the
Norton 301-T igniter to produce the infrared light beam that is directed
into its testing chamber. In
the district court, On-Line argued that Perkin-Elmer learned of the Norton
301-T igniter during its visits to On-Line’s facility and used that
information to produce its own gas cell, which uses the same igniter as a
light source. The district
court concluded that the use of the Norton 301-T igniter as the light
source was not a trade secret because that use was publicly disclosed in a
third party’s patent, U.S. Patent No. 5,291,022 (“the
’022 patent”), which issued in March of 1994.
On
appeal, On-Line argues that although the use of the Norton 301-T igniter as
a high-intensity infrared radiation source was known, its use for that
purpose in connection with a long-path gas cell was not. It was not the Norton 301-T igniter
itself that was the protected trade secret, On-Line argues, but rather the
specific purpose to which it was put in On-Line’s product. In support of that argument, On-Line
points to a report by On-Line’s expert, Dr. Warren Vidrine, which
described the difference between the use of the Norton 301-T igniter in the
’022 patent and its use in the On-Line and Perkin-Elmer devices. Specifically, On-Line points to Dr.
Vidrine’s statement that On-Line and Perkin-Elmer both “use
metal mirrors to reflect radiation back to the source element to reduce the
amount of heat which would otherwise be wasted. The ’022 patent source design
does not include any reflective mirrors.”
Dr.
Vidrine’s report does not suggest that the use of the Norton 301-T
igniter as an infrared radiation source in a long-path gas cell constituted
a trade secret. Instead, his
report is directed to the overall design of the source assembly. Moreover, the disclosure in the
’022 patent of the uses to which a source such as the Norton 301-T
ceramic igniter source could be put was very broad. The ’022 patent addresses “the
field of light sources, particularly those emitting in the infrared
wavelengths, and more particularly to infrared sources used in analytical
instruments such as infrared spectrometers.” ’022 patent, col. 1, ll.
5-9. It also explicitly refers
to the Norton 301-T igniter as a suitable light source. Id., col. 6, ll. 50-53. Moreover, Dr. Hoult stated that
Perkin-Elmer had determined independently that others were using Norton
igniters and that by the time of his visit to On-Line’s facility
Perkin-Elmer’s biggest competitor had been using Norton igniters in
infrared spectrometers for approximately two years. In light of the breadth of the
disclosure in the ’022 patent, the evidence that Perkin-Elmer had
learned of the Norton igniter independently, and in the absence of any
contrary evidence from On-Line, we agree with the district court that no
reasonable jury could conclude that the use of a Norton 301-T igniter in an
infrared spectrometer constituted a protectable trade secret that
Perkin-Elmer misappropriated from On-Line.
On-Line
also argued before the district court that Perkin-Elmer misappropriated an
On-Line trade secret when it incorporated into its source assembly two
reflective surfaces similar to those that On-Line had developed to enhance
and collimate the infrared light beam directed into the testing
chamber. In support of that
argument, On-Line offered Dr. Vidrine’s report, which asserted that
the igniter source assembly in Perkin-Elmer’s devices, including a
reflective cavity and a field mirror, was similar to the source assembly in
On-Line’s system.
The
district court held that On-Line’s evidence with regard to the source
assembly claim did not raise a disputed issue of material fact, and we
agree. Although Dr. Vidrine
asserted that, in his opinion, Perkin-Elmer “commenced to copy, adapt
and prepare to take advantage of” features of the On-Line source
assembly, including the retroreflective cavity, he did not cite evidence to
support that assertion.
Instead, Dr. Vidrine’s assertion was based on his comparison
of the optical elements in the source assembly of the On-Line and
Perkin-Elmer instruments. With
respect to the retroreflector, Dr. Vidrine stated that one of
Perkin-Elmer’s two products used a “very similar
retroreflector” having a “similarly shaped reflective
cavity,” and that the retroreflector in the other Perkin-Elmer
product, although “not a simple copy” of On-Line’s
design, “produced a functionally similar result.” Dr. Vidrine inferred copying based
on the fact that Perkin-Elmer “rapidly adopted” a reflective
cavity design. With respect to
the field mirror, Dr. Vidrine did not claim that Perkin-Elmer’s
designs were identical to On-Line’s design, but asserted that
Perkin-Elmer’s designs, like On-Line’s, were “good
optical engineering solutions” for matching a small hot area with the
desired beam characteristics of the respective instruments.
In support of its summary judgment
motion, Perkin-Elmer offered affidavits from Dr. Hoult, in which he
asserted that Perkin-Elmer did not make use of anything he learned about
On-Line’s source assembly as a result of his visit to On-Line’s
facility. In particular, he
stated that the optics in the source assembly of the Perkin-Elmer system
were “what I would describe as text-book,” that the combination
of mirrors used in Perkin-Elmer’s devices had been developed several
years before his contact with On-Line and had first been used in
Perkin-Elmer infrared spectrometers in 1989, that the arrangement of
mirrors in the various source assemblies is in essence the same as the
arrangement of mirrors in an automobile headlight, and that he did not
learn from his visit to On-Line’s facility that On-Line used a
retroreflector in its source assembly.
In
rebuttal, On-Line relied principally on a contemporaneous report by Dr.
Hoult regarding his trip to On-Line’s facility. On-Line argued that the Hoult trip
report demonstrated that Dr. Hoult saw On-Line’s source assembly
during his visit. The report
described the source as follows:
Norton
gas-igniter, silicon carbide hairpin mounted on a cylinder with easy
push-fit access from the front top.
Source hangs down so that debris falls harmlessly away. Source collimation appeared to be an
off-axis parabola machined directly on the end of an aluminum cylinder. No firm details of lifetime for
source.
That
discussion of the source housing (a cylinder with easy push-fit access from
the front top) could be interpreted to refer to the source assembly at
issue in this case. A reasonable
jury could conclude that the “off-axis parabola machined directly on
the end of an aluminum cylinder” describes a retroreflective cavity
designed to focus the radiation emitted by the Norton igniter, especially
given that its purpose is for “[s]ource collimation.”
Even
accepting the inference from the trip report that Dr. Hoult viewed
On-Line’s source assembly, On-Line’s evidence is insufficient
to avoid summary judgment because On-Line failed to address the assertions
in Dr. Hoult’s affidavit that the mirror array in the source assembly
was “text-book” and that Perkin-Elmer had used a similar
combination of mirrors in a like instrument years earlier. Although On-Line argues that the
earlier device did not use a ceramic igniter as the energy source, there
was no evidence before the district court that the difference in the energy
source rendered On-Line’s source assembly sufficiently distinct to
constitute a protectable trade secret.
Moreover, nothing in the Hoult trip report suggests that the structure
of the source assembly was unfamiliar to Dr. Hoult; in fact, the
abbreviated description of the source assembly in the trip report suggests
the contrary. In any event, the
mere description of the source assembly in the Hoult trip report is insufficient
to overcome the evidence from Dr. Hoult that the design of source
assemblies of the sort used by On-Line was already familiar to Perkin-Elmer
and that the design of On-Line’s source assembly was not a trade
secret that Perkin-Elmer misappropriated as a result of the visit to
On-Line’s facility. As to
that issue, On-Line is essentially limited to Dr. Vidrine’s
conclusory assertion that Perkin-Elmer misappropriated On-Line’s
design, and such conclusory assertions by expert witnesses are not
sufficient to avoid summary judgment.
See Schwing GMBH v. Putzmeister Aktiengesellschaft,
305 F.3d 1318, 1326 (Fed. Cir. 2002); Applied Cos. v. United States,
144 F.3d 1470, 1475 (Fed. Cir. 1998); Arthur A. Collins, Inc. v. N.
Telecom Ltd., 216 F.3d 1042, 1046-48 (Fed. Cir. 2000). We therefore uphold the district
court’s grant of summary judgment as to the source assembly.
III
In
addition to the trade secret claims, On-Line raised state law claims of
fraud, breach of contract, and unfair trade practices. The district court granted summary
judgment for Perkin-Elmer as to each of those claims. On-Line appeals as to each.
A. The Fraud Claim
The
district court rejected On-Line’s fraud claim on the ground that it
fell within the scope of CUTSA and was therefore preempted under
CUTSA’s preemption provision, Conn. Gen. Stat. § 35-57(a). On-Line argues that its claim is not
preempted because the facts on which its fraud claim is based differ from
those that support its misappropriation claim. On-Line contends that its fraud
claim is based on the proposed business transaction being negotiated by the
parties, rather than the misappropriation of trade secrets. The district court concluded
otherwise, and we agree.
Section
35-57(a) of the Connecticut General Statutes states that “[u]nless
otherwise agreed by the parties, the provisions of this chapter supersede
any conflicting tort, restitutionary, or other law of this state pertaining
to civil liability for misappropriation of a trade secret.” The preemptive effect of that
statute is limited by subsection (b), which states that it does not affect
“[c]ontractual or other civil liability or relief that is not based
upon misappropriation of a trade secret,” among other things. Conn. Gen. Stat. §
35-57(b). On-Line contends that
its fraud claims are not based upon the misappropriation of a trade secret
and thus they are not preempted under section 35-57.
The
district court concluded that On-Line’s fraud claim was based on the
theory that Perkin-Elmer’s allegedly fraudulent actions allowed it to
misappropriate On-Line’s trade secrets. In the fraud portion of its
complaint, On-Line alleged that Perkin-Elmer had induced it to disclose a
variety of trade secrets.
On-Line now contends that the district court misunderstood its fraud
allegations; in its brief On-Line contends that its fraud claim “is
related to the proposed business transaction being negotiated by the
parties,” and is not related to the misappropriation of trade
secrets. On-Line focuses in
particular on Perkin-Elmer’s termination of the licensing
negotiations in November 1994 and Perkin-Elmer’s allegedly false
statement that the evaluation of On-Line’s technology was
unsatisfactory.
The
problem with that characterization of the fraud claim is that it is unclear
how that statement—even if false—misled On-Line to its
prejudice, see Paiva v. Vanech Heights Constr. Co., 271 A.2d
69, 71 (Conn. 1970), except perhaps to promote the furtive misappropriation
of On-Line’s trade secrets by suggesting that Perkin-Elmer was uninterested
in the technology when in fact Perkin-Elmer intended to copy it. If that is the purpose suggested by
On-Line’s argument regarding the November 1994 false statement, it
merely demonstrates that the ultimate injury to which the alleged fraud was
directed was the misappropriation of On-Line’s trade secrets. In its brief, On-Line has not
suggested any other injury that On-Line suffered as a result of
Perkin-Elmer’s allegedly fraudulent conduct. The district court therefore
properly held that the fraud claim was preempted under section 35-57.
B. The Breach of
Contract Claim
The
district court granted summary judgment with respect to On-Line’s
breach of contract claim on the ground that the nondisclosure agreement
between On-Line and Perkin-Elmer provided no greater protection than that
provided by CUTSA. Because the
court concluded that no reasonable jury could find a CUTSA violation, the
court held that there could be no breach of contract, either.
On-Line
argues that its breach of contract claim is different from its trade secret
misappropriation claim.
On-Line, however, does not suggest that if it failed to prove
misappropriation of trade secrets it would be nonetheless be entitled to
relief on a breach of contract theory for violating the covenant not to
disclose trade secrets.
Instead, in its brief in this court On-Line focuses on the provision
of the nondisclosure agreement that imposed on Perkin-Elmer the obligation
to return “all copies” of information that On-Line designated
as confidential. Because
Perkin-Elmer retained some records containing confidential materials
relating to the On-Line spectrometer, On-Line argues that the district
court improperly granted summary judgment on the breach of contract claim.
The
district court addressed On-Line’s argument with regard to
Perkin-Elmer’s alleged failure to return documents and held that
On-Line did not raise the failure to return documents as a basis for
liability in the breach of contract claim in its complaint. Because On-Line failed to raise that
claim in a timely manner, it was not error for the district court to reject
On-Line’s effort to raise that aspect of the contract as a basis for
liability at the summary judgment stage.
C.
The Unfair Trade Practices Claims
The
district court held that On-Line’s unfair trade practices claims are
preempted by CUTSA. In its
complaint, On-Line raised claims against Perkin-Elmer under the Connecticut
Uniform Trade Practices Act.
Specifically, On-Line alleged that Perkin-Elmer had improperly used
trade secrets obtained from On-Line to make its own products and had
represented to a variety of parties that On-Line’s trade secrets were
its own. The district court
concluded that those allegations constituted nothing more than CUTSA
violations and that the unfair trade practice claims were therefore
preempted by section 37-57(a).
On-Line
argues that because Perkin-Elmer gained access to its trade secrets under
the guise of offering a license agreement, its claims are not preempted by
CUTSA. We cannot agree. All of On-Line’s allegations
relate to the misappropriation of trade secrets, as is clear from
On-Line’s complaint, which relies upon Perkin-Elmer’s alleged
acquisition and use of On-Line’s confidential information. As a result, we agree with the trial
court that CUTSA preempts On-Line’s unfair trade practices claims.
IV
On-Line
contends that the district court erred when it dismissed Sick, A.G., from
the lawsuit based on a lack of personal jurisdiction. In support of its argument, On-Line
points to several events: a visit by a Sick, A.G., representative to
On-Line’s facility in East Hartford, Connecticut; a nondisclosure
agreement with On-Line signed by a representative of Sick, A.G.; a report
prepared by a representative of Sick, A.G., relating to his visit to the
On-Line facility; the receipt by Sick, A.G., of a copy of On-Line’s
business plan; and a subsequent inquiry by Sick, A.G., to On-Line.
The
trial court concluded that the evidence offered in support of
On-Line’s claim of personal jurisdiction over Sick, A.G., was
insufficient to establish personal jurisdiction under Connecticut’s
long-arm statute, Conn. Gen. Stat. § 33-929. The court found that none of the
allegations regarding Sick, A.G., were sufficient to constitute tortious
conduct under Conn. Gen. Stat. § 33-929(f), solicitation of business
under Conn. Gen. Stat. § 33-929(f)(2), or a business transaction under
Conn. Gen. Stat. § 33-929(e).
On-Line has not specifically challenged any of those findings, but instead
has made only a general assertion that the district court’s ruling is
“incorrect and inequitable.” Because On-Line has failed to point
out any specific errors in the district court’s analysis, and because
the court’s jurisdictional ruling is not otherwise flawed, we uphold
the district court’s ruling that it lacked personal jurisdiction over
Sick, A.G.
* * * * *
In
summary, we affirm the grant of summary judgment with respect to
On-Line’s state law claims and with respect to the order dismissing
Sick, A.G., on grounds of lack of personal jurisdiction. As to the patent claim, we vacate
the grant of summary judgment of noninfringement and remand that issue to
the district court for further proceedings.
Each
party shall bear its own costs for this appeal.
AFFIRMED IN PART, VACATED IN PART, and REMANDED.
United States Court of Appeals for the Federal Circuit
03-1117
THE DOW
CHEMICAL COMPANY,
Plaintiff-Appellant,
v.
MEE
INDUSTRIES, INC. and FLORIDA POWER CORPORATION,
Defendants-Appellees.
Arthur
M. Lieberman, Dickstein Shapiro Morin & Oshinsky LLP, of New York,
New York, argued for plaintiff-appellant. With him on the brief were Keith
D. Nowak and Abbey Green.
Of counsel on the brief were William J. Schramm and Andrew
M. Grove, Reising, Ethington, Barnes, Kiselle, Learman &
McCullouch, PC, of Troy, Michigan.
Also of counsel on the brief was Bruce M. Kanuch, The Dow
Chemical Company, of Midland, Michigan.
Harold
E. Wurst, Christie, Parker & Hale, LLP, of Pasadena, California,
argued for defendants-appellees.
With him on the brief were Stephen D. Burbach and Brian L.
Yates.
Appealed from: United
States District Court for the Middle District of Florida
Judge Gregory A. Presnell
United States Court of Appeals for the Federal Circuit
03-1117
THE DOW CHEMICAL COMPANY,
Plaintiff-Appellant,
v.
MEE
INDUSTRIES, INC. and FLORIDA POWER CORPORATION,
Defendants-Appellees.
___________________________
DECIDED: September 5, 2003
___________________________
Before
CLEVENGER, BRYSON, and DYK, Circuit Judges.
DYK, Circuit
Judge.
Dow Chemical Company
(“Dow”) appeals the judgment by the United States District
Court for the Middle District of Florida in favor of Mee
Industries, Inc. (“Mee”)
and Florida Power Corporation (“Florida Power”) (collectively
“appellees”). Dow
Chem. Co. v. Mee Indus., 65
USPQ2d 1876 (M.D. Fla. 2002).
We affirm as to the judgment of invalidity of claims 14-16, 21, and
22 of U.S. Patent No. 5,867,977 (“the ’977 patent”) and
claim 30 of U.S. Patent No. 5,930,990 (“the ’990
patent”), but reverse as to the judgment of invalidity of claims 23
and 24 of the ’977 patent.
We also affirm the judgment of no infringement by Florida Power and Mee as to
claims 35, 37, and 38 of the ’977 patent. As to the infringement of claims 23
and 24 of the ’977 patent, we affirm the judgment of no direct
infringement by Mee and
Florida Power, but vacate and remand for further proceedings as to
contributory and induced infringement by Mee. Finally, we hold that the district
court erred in concluding that Dow did not carry its burden to establish
damages because it failed to provide expert testimony on the damages issue.
BACKGROUND
Dow is the assignee of the
’977 and ’990 patents (“the patents-in-suit”), both
entitled “Method and
Apparatus for Achieving Power Augmentation in Gas Turbines Via Wet
Compression.” The
’977 patent was filed as a continuation-in-part based on the
application that issued as the ’990 patent. Substantial changes were made in the
text of the application that led to the issuance of the ’977
patent. However, the
differences between the two specifications are not pertinent to this
appeal. Reference will be made
to the specification of the ’977 patent as exemplary of the
disclosures of the patents-in-suit.
The patents-in-suit are directed to
improving the efficiency of gas turbines by increasing their power
output. The improved efficiency
results from modifying a turbine to employ an effect called “wet compression,”
which operates by permitting liquid water particles to enter the compressor
of a gas turbine. The patents-in-suit explain wet compression as follows:
Wet
compression enables power augmentation in gas turbine systems by reducing
the work required for compression of the inlet air. This thermodynamic benefit is
realized within the compressor of a gas turbine through “latent heat
intercooling”, where water (or some other appropriate liquid) added to
the air inducted into the compressor cools that air, through evaporation,
as the air with the added water is being compressed. The added water can be
conceptualized as an “evaporative liquid heat sink” in this
regard.
’977
patent, col. 2, ll. 3-12.
The inventors did not purport to have
discovered power augmentation through wet compression, admitting in the
Background of the Invention section that “[t]he power augmentation
benefits of wet compression have been generally understood for some
time.” Id. at col.
2, ll. 35-36. However, the
inventors asserted that they were the first to comprehend that a large
amount of water could be added to an operational compressor without
destroying the compressor by adding the water in increments. Thus, the invention was directed at
achieving the beneficial effects of wet compression while minimizing its
potentially deleterious side effects.
On April 5, 2000, Dow filed a
complaint alleging patent infringement of the ’977 and ’990
patents by Mee and
Florida Power. Dow, inter
alia, asserted infringement of claims 14-16, 21-24, 35, and 37-38 of
the ’977 patent and claim 30 of the ’990 patent. Claim 14 of the ’977 patent
was the sole asserted independent claim of the ’977 patent, although
asserted dependent claims 35, 37, and 38 depended either directly or
indirectly from independent claim 29, which was not directly asserted. Independent claim 30 was the only
claim of the ’990 patent at issue. On May 10 and 11, respectively, Mee and
Florida Power answered the complaint and asserted invalidity, unenforceability,
and noninfringement counterclaims against Dow. Following an August 2, 2001,
hearing, the district court issued an order on August 17, 2001, construing
disputed claim terms.
The district court held a six-day
bench trial between December 10 and 18, 2001, addressing the claims of
infringement and the counterclaims.
During trial, the court excluded the testimony of Dow’s expert
on damages, citing Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993). On September 19, 2002, the court
issued a memorandum opinion finding that Dow was not entitled to damages as
a matter of law because it “had not carried its burden to establish
damages.” Dow, 65
USPQ2d at 1879. The court also
held claims 14-16 and 21-24 of the ’977 patent and claim 30 of the
’990 patent invalid under 35 U.S.C. § 103. Id. at 1897. Finally, the court held claims
14-16, 21-24, 35, and 37-38 of the ’977 patent and claim 30 of the
’990 patent not infringed by Mee or
Florida Power. Id.
The court concluded that two pieces
of prior art supported the obviousness determination. The first was a 1990 article
entitled “Gas Turbine Performance Direct Mixing Evaporative Cooling
System, American Atlas Cogeneration Facility, Rifle, Colorado,” by J.
P. Nolan and V. J. Twombly (“the Nolan Article”). The Nolan article described
“the design, installation, operation and performance of a direct
mixing evaporative cooling system.” Nolan Article at 1. As found by the district court, this
reference taught the use of 16 gallons per minute of
“overspray” (wet compression), which resulted “in an
increase in output due to the mass flow.” Dow, 65 USPQ2d at 1884. The court also found that
“[t]he system as operated did not . . . use increments.” Id.
The second piece of prior art
relied upon by the court was a May 1, 1995, document entitled “Fog
System Proposal for Fern Engineering Company: Gas Turbine Overspray Cooling
System” (“the Mee
proposal”) sent by Mee to Fern
Engineering. The court found
this document to be an offer to sell the system described in the Mee
proposal. Dow, 65 USPQ2d
at 1890. The Mee proposal
was sent in response to an equipment specification entitled “Duct
Water Spray Delivery System Specification for a Gas Turbine Inlet Water
Overspray Cooling System” sent by Fern Engineering to Mee on
January 17, 1995. (J.A. 10306)
(“the Fern Specification”). The court relied upon
the Fern Specification when determining what was offered for sale in the Mee
proposal. Dow, 65 USPQ2d
at 1884-85. The court found
that the system as proposed would incrementally introduce up to one percent
water uniformly into a gas turbine “assuming a fully humidified
day.” Id. at 1893.
On the issue of infringement, the
court found that Dow “ha[d] not met its burden of proof to show that Me |