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From Intellectual Property Law Daily, March 29, 2019

Obviousness of tire valve patent to be retried; damages award will stand if patent found valid

By George Basharis, J.D.

A new trial was granted so a manufacturer accused of infringing the patent can challenge its validity by presenting additional obviousness theories that the district court should not have disallowed.

The U.S. Court of Appeals for the Federal Circuit has ordered a new trial to be held as to the validity of a tire valve patent asserted by a tire repair kit manufacturer against a competitor because a federal district court erred by not allowing the accused competitor to present additional obviousness theories on its invalidity defense. The court vacated the district court’s final judgment as to validity and reversed its denial of a motion for partial new trial on validity. In the interest of judicial economy, the appellate court affirmed the district court’s damages award and entry of a permanent injunction against the competitor, in the event the asserted patent is found not invalid following the new trial (TEK Global, S.R.L. v. Sealant Systems International, Inc., March 29, 2019, Prost, S.).

TEK Corporation and TEK Global, S.R.L. (collectively, TEK) sells tire repair kits to various original equipment manufacturers (OEM) and owns U.S. Patent No. 7,789,110 (the ’110 patent). Sealant Systems International and ITW Global Tire Repair (collectively, SSI) is an OEM that also makes emergency tire repair kits and competes directly with TEK. TEK employs a patented three-way valve design with an "additional hose" that connects an air compressor to a tire. In November 2010, TEK sued SSI for infringing the ’110 patent. After a jury trial, the district court found that the ’110 patent was valid, SSI’s tire repair kits infringed on the ’110 patent, and TEK was entitled to damages for lost profits and a permanent injunction. SSI appealed.

Validity. SSI maintained that the claims in the ’110 patent were invalid because they were obvious over U.S. Patent Application No. 2003/0056851 (Eriksen) in view of Japanese Patent No. 2004-338158 (Bridgestone), which described an air tube that worked together with a tire but that was not directly connected to the tire. The district court determined that Eriksen and Bridgestone did not disclose "an additional hose cooperating with" a tire and therefore the court did not allow the jury to compare Eriksen and Bridgestone to the three-way valve design of the ’110 patent. However, the district court should not have barred SSI from presenting other obviousness theories based on a combination of Erikson and Bridgestone.

While the appellate court declined to reverse the district court’s denial of judgment as a matter of law of invalidity, it reversed the district court’s denial of SSI’s motion for a partial new trial on validity. The district court was therefore directed to grant SSI a new trial limited to determining the issue of validity on an appropriate evidentiary record.

Infringement. SSI argued that the ’110 patent required elements such as a "fast-fit coupling" and an outer casing that connects the tire repair kit’s container of sealant to the compressor and that its tire repair kit did not have that feature. Further, the coupling was described in the ’110 patent as "conduits connecting the container" and "container connecting conduit" and, according to SSI, "conduits connecting the container" and "container connecting conduit" were means-plus-function limitations because the term "conduit" was a nonce word under 35 U.S.C. §112. However, the district court found that the term "conduit" "recites ‘a structure that would be understood by one skilled in the art and in light of the claim language.’"

The Federal Circuit court agreed and found that "conduit" was not a nonce term because it described the connection of elements—the container of sealant, the air compressor, and a tire—with definite structure. Moreover, the conduits described in the patent served to physically connect a container of sealing liquid to a compressor and to connect the compressor to tires such that "[t]he liquid is fed into the [tire] for repair by means of compressed air, e.g., by means of a compressor."

The appeals court also rejected SSI’s argument that the lower court erred by allowing the jury to hear indirect product-to-product comparisons. The district court correctly determined that SSI invited a product-to-product comparison when its expert witness testified that there were differences between SSI’s tire repair kit and TEK’s product. Further, the district court instructed the jury not to perform a product-to-product comparison to decide the issue of infringement.

Damages. TEK argued that SSI was not entitled to lost profits because TEK failed to establish that it had the manufacturing capacity to make the sales that SSI made. However, SSI and TEK were head-to-head competitors and there was substantial evidence to support the jury’s findings that TEK "lost a lot of business" to SSI. The evidence also supported the jury’s findings that TEK had the capacity to make the sales SSI had made and that TEK would have made a profit from those sales.

Permanent injunction. SSI also argued that the district court abused its discretion by granting a permanent injunction. According to SSI, TEK failed to establish a causal nexus between the infringing feature and lost sales. However, the infringing feature is not required to be the only feature driving demand, and TEK established that a significant reason consumers chose to buy its tire repair kits was the presence of the patented features.

SSI also argued that damages would adequately compensate TEK for SSI’s past infringement. The court rejected the argument because TEK’s central product was its emergency tire repair kits, and money damages could not adequately compensate TEK for lost market share. The balancing of hardships also favored TEK, which would be forced to compete with its own patented invention absent the injunction. There was ample evidence in the record to show that SSI and TEK competed for the same customers in the same market and that TEK lost market share to SSI. Finally, the injunction would not negatively impact SSI’s customers because the injunction contained a sunset provision that gave SSI nine months to design around TEK’s patent.

This case is No. 17-2507.

Attorneys: Daniel E. Jackson (Keker, Van Nest & Peters LLP) and Ashok Ramani (Davis Polk & Wardwell LLP) for TEK Global, S.R.L. and TEK Corp. Stanley Martin Gibson (Jeffer Mangels Butler & Mitchell LLP) for Sealant Systems International, Inc. and ITW Global Tire Repair.

Companies: TEK Global, S.R.L.; TEK Corp.; Sealant Systems International, Inc.; ITW Global Tire Repair

MainStory: TopStory Patent FedCirNews

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