IP Law Daily Equitable estoppel did not apply to patent claims amended following USPTO reexamination
Thursday, April 19, 2018

Equitable estoppel did not apply to patent claims amended following USPTO reexamination

By Thomas Long, J.D.

The owner of a patent for equipment used to cool poultry carcasses was not barred by equitable estoppel from pursuing infringement claims against a competitor based on activity that took place prior to the issuance of a reexamination certificate amending and adding the asserted patent claims, the U.S. Court of Appeals for the Federal Circuit has held. The asserted patent claims were amended or added following an ex parte reexamination in 2014, and the patent owner only sought damages for infringement of the reexamined claims. Therefore, a district court abused its discretion in finding equitable estoppel based on activity beginning in 2002, 12 years prior to the issuance of the reexamination certificate. The court also reversed the district court’s determination that the infringement suit was barred by laches, pursuant to the Supreme Court’s decision in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017), holdingthat laches cannot be asserted as a defense to infringement occurring within the six-year period prior to the filing of a complaint for infringement as prescribed by 35 U.S.C. §286 (John Bean Technologies Corp. v. Morris & Associates, Inc., April 19, 2018, Reyna, J.).

John Bean Technologies Corp., through its predecessor-in-interest, Cooling & Applied Technology, Inc. owned U.S. Patent No. 6,397,622 ("the ’622 patent"), which was directed to a "high-side" auger-type chiller for cooling poultry carcasses. Morris & Associates, Inc., competed with John Bean in the poultry chiller market. John Bean and Morris were the only two poultry chiller manufactures in the United States. In June 2002, shortly after the ’622 patent issued, Morris’s counsel contacted John Bean’s counsel, stating that John Bean had been contacting Morris’s customers and telling them that Morris’s equipment infringed the ’622 patent. Morris also stated in the correspondence that it believed the ’622 patent was invalid based on multiple prior art references. Morris threatened to sue John Bean for unfair competition if it continued to represent to customers that Morris was infringing the patent. John Bean never responded to this correspondence, although it admitted that it had received it. Morris continued to develop and sell its chillers.

On December 18, 2013, John Bean filed a request for ex parte reexamination of the ’622 patent with the USPTO. At the time of its issuance, the ’622 patent contained two claims, independent claim 1 and dependent claim 2. The USPTO rejected both claims as anticipated or rendered obvious by other prior art patents. In response to the rejections, John Bean amended both its specification and its claims. Along with amending the two original claims, John Bean added six additional claims. On May 9, 2014, the USPTO issued a reexamination certificate under 35 U.S.C. §307 allowing the amended and newly added claims. Independent claim 1 was heavily amended to add details regarding the structure and function of the claimed auger-type food product chiller. Claim 2 was not itself amended but was limited by the newly added language to claim 1.

On June 19, 2014, John Bean filed suit against Morris for patent infringement in the U.S. District Court for the Eastern District of Arkansas. In its amended complaint dated December 4, 2015, John Bean alleged that Morris directly infringed the ’622 patent from the date the reexamination certificate issued on May 9, 2014, and induced and willfully infringed the ’622 patent from the date it served Morris with the original complaint on June 20, 2014. John Bean did not allege that Morris engaged in any infringing activity prior to the issuance of the reexamination certificate, and it did not seek damages for any activity prior to that date.

On December 14, 2016, the district court granted summary judgment in favor of Morris, holding that John Bean was barred by the defenses of equitable estoppel and laches from pursuing its infringement suit. According to the district court, the letter from Morris’s counsel established that "by June 2002, [John Bean] knew that [Morris] was selling a product that [John Bean] believe[d] infringed on their ’622 patent." The district court found that John Bean’s silence constituted misleading conduct because John Bean was aware that Morris would continue to invest, develop, and sell its chillers absent a response from John Bean, and that Morris would be materially prejudiced if John Bean was allowed to pursue its infringement action.

On appeal, the parties agreed that SCA Hygiene precluded the laches defense, so the Federal Circuit reversed the district court’s grant of summary judgment on that basis. With respect to equitable estoppel, the appellate court noted that this case presented an unusual situation in which the district court had found that equitable estoppel barred an infringement action based on activity prior to the issuance of the asserted reexamination claims. There was no clear precedent on this specific situation.

The Federal Circuit first pointed out that claims amended and issued during reexamination cannot be broader than the original claims. When claims are narrowed during reexamination to overcome prior art, any analysis of the validity of the narrowed claims would necessarily differ from the analysis of the original claims. Therefore, Morris’s 2002 challenge to the validity of the ’622 patent claims may no longer be accurate. Indeed, the court said, it would not be inappropriate for John Bean to narrow its claims in response to Morris’s letter.

Second, the court explained that a patentee cannot assert reexamination claims to seek damages for infringement taking place prior to the issuance date of the reexamination certificate, when the reexamined claims are not identical in scope to the original ones. The changes made to the claims of the ’622 patent were substantial and substantive, in the court’s view. Among other things, new limitations were added to the claims.

Finally, the court noted that it had previously held that equitable estoppel did not apply to pending claims during the reexamination of a patent application. This supported its conclusion that equitable estoppel was inapplicable in this case, the court said. The reasoning was that claims that have not been issued cannot be asserted, and therefore no misleading conduct or silence could exist. Accordingly, the elements of equitable estoppel were not present. John Bean could not have engaged in misleading conduct or silence with respect to claims that either did not yet exist or were later substantively altered. The Federal Circuit concluded that the district court abused its discretion in applying equitable estoppel, and it reversed the district court’s grant of summary judgment in favor of Morris and remanded for further proceedings.

The case is No. 2017-1502.

Attorneys: Gary D. Marts, Jr. (Wright, Lindsey & Jennings LLP) for John Bean Technologies Corp. Norman Andrew Crain (Thomas|Horstemeyer LLP) for Morris & Associates, Inc.

Companies: John Bean Technologies Corp.; Morris & Associates, Inc.

MainStory: TopStory Patent FedCirNews

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