John Bean Technologies v. Morris & Associates Inc , 887 F.3d 1322 ( 2018 )

United States Court of Appeals
for the Federal Circuit
______________________
JOHN BEAN TECHNOLOGIES CORPORATION,
Plaintiff-Appellant
v.
MORRIS & ASSOCIATES, INC.,
Defendant-Appellee
______________________
2017-1502
______________________
Appeal from the United States District Court for the
Eastern District of Arkansas in No. 4:14-cv-00368-BRW,
Senior Judge Billy Roy Wilson.
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Decided: April 19, 2018
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GARY D. MARTS, JR., Wright, Lindsey & Jennings LLP,
Little Rock, AR, argued for plaintiff-appellant. Also
represented by RICHARD BLAKELY GLASGOW.
NORMAN ANDREW CRAIN, Thomas|Horstemeyer LLP,
Atlanta, GA, argued for defendant-appellee. Also repre-
sented by DAN ROBERT GRESHAM, WESLEY AUSTIN
ROBERTS.
______________________
2 JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC.
Before PROST, Chief Judge, REYNA and WALLACH, Circuit
Judges.
REYNA, Circuit Judge.
John Bean Technologies Corp. appeals from a decision
by the United States District Court for the Eastern Dis-
trict of Arkansas holding that its patent infringement
claims are barred by the affirmative defenses of equitable
estoppel and laches. 1 Because the asserted claims in this
action were substantively amended or added following ex
parte reexamination in 2014, and the plaintiff only sought
damages for infringement of the reexamined claims, the
district court abused its discretion in finding equitable
estoppel based on activity beginning in 2002, twelve years
prior to the issuance of the reexamination certificate. We
therefore reverse the district court’s grant of summary
judgment based on its finding of equitable estoppel, and
remand for proceedings consistent with this opinion.
1 Following the district court’s grant of summary
judgment, the Supreme Court issued its decision in SCA
Hygiene Products Aktiebolag v. First Quality Baby Prod-
ucts, LLC, 137 S. Ct. 954 (2017), holding that 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. As the
allegedly infringing activity for which John Bean seeks
damages started on May 9, 2014, and John Bean filed its
complaint for patent infringement on June 19, 2014, we
hold, and the parties agree, that SCA Hygiene bars Mor-
ris’s laches defense. Appellant’s Br. 41; Appellee’s Br. 1
n.2. We thus reverse the district court’s grant of sum-
mary judgment based on Morris’s affirmative defense of
laches.
JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC. 3
BACKGROUND
John Bean Technologies Corp., through its predeces-
sor-in-interest, Cooling & Applied Technology, Inc. (collec-
tively “John Bean”) owns U.S. Patent No. 6,397,622 (“’622
patent”), which is directed to a “high-side” auger-type
chiller for cooling poultry carcasses. J.A. 35. The ’622
patent issued on June 4, 2002. At the time of its issuance,
the ’622 patent contained two claims, independent claim 1
and dependent claim 2.
Appellee Morris & Associates, Inc. (“Morris”) com-
petes with John Bean in the poultry chiller market. They
are the only two poultry chiller manufactures in the
United States, and have frequently found themselves on
opposing sides of a courtroom. J.A. 8, 48. On June 27,
2002, shortly after the ’622 patent issued, Morris’s coun-
sel sent a letter to John Bean’s counsel, informing him
that John Bean had been contacting Morris’s customers
and that John Bean “representatives have asserted to the
customers that the equipment being sold by Morris in-
fringes U.S. Patent 6,397,622 recently issued to [John
Bean].” J.A. 263 (“Demand Letter”). The Demand Letter
notified John Bean that Morris believed the ’622 patent to
be invalid based on multiple prior art references, and
concluded with the following demand:
If [John Bean] is not convinced that its patent
6,397,622 is invalid, I request that you provide the
information necessary to show why each one of
[the prior art references] do not anticipate or
make obvious the claims of the patent.
Because of the several reasons for invalidity of
the ’622 patent, we demand that you advise [John
Bean] to terminate its statements that the sale of
the Morris Poultry Chiller will infringe the ’622
patent. Such statements on behalf of [John Bean]
is [sic] misleading because the patent is invalid
and such statements persuade the customers to
4 JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC.
purchase the [John Bean] poultry chiller based on
the invalid patent. This comprises unfair compe-
tition.
Now that [John Bean] has been informed of
the invalidity of its patent, any statements that
assert infringement of U.S. Patent 6,397,622
made from this point on are likely to be met with
a suit for unfair competition.
J.A. 266. The prior art asserted in the Demand Letter
included a primary reference for both anticipation and
obviousness invalidity arguments, U.S. Patent No.
5,868,000 (“’000 patent”). J.A. 264–65. It is undisputed
that John Bean both received and never responded to the
Demand Letter. J.A. 3, 284 (admitting that John Bean
received the Demand Letter through its counsel), 279
(admitting through its company representative that John
Bean did not respond to the Demand Letter). With no
response from John Bean, Morris continued to develop
and sell its chillers.
On December 18, 2013, eleven years after the ’622 pa-
tent first issued, John Bean filed a request for ex parte
reexamination of the ’622 patent with the U.S. Patent and
Trademark Office. J.A. 137. The Patent Office granted
John Bean’s request for ex parte reexamination, and
rejected both claims of the ’622 patent as anticipated or
rendered obvious by other prior art patents. J.A. 3. This
included an anticipation rejection based on the ’000
patent, and obviousness rejections with the ’000 patent as
the primary reference. In response to the rejections, John
Bean amended both its specification and its claims. In
addition to amending the two original claims of the ’622
patent, John Bean added six additional claims, including
independent claim 8. J.A. 44. On May 9, 2014, the Pa-
tent Office issued a reexamination certificate under 35
U.S.C. § 307 allowing the amended and newly added
claims. J.A. 43–45.
JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC. 5
Claim 1, the sole original independent claim, was
heavily amended as follows, with the italicized text indi-
cating newly added language:
1. An auger type food product chiller, comprising:
a tank comprising longitudinal side walls
having an inlet end and an outlet end,
an inlet wall closing said inlet end, an
outlet wall closing said outlet end,
wherein said longitudinal side walls
comprise an inner surface and an outer
surface, wherein said longitudinal side
walls, said inlet wall and said outlet
wall together form a semi-cylinder hav-
ing an inner surface and an outer sur-
face;
an auger comprising a shaft and a helical
blade, wherein said helical blade forms
at least one flight having outer edges,
wherein said helical blade and said in-
ner surface of said tank side walls forms
a helical path between said inlet end of
said tank and said outlet end of said
tank, said auger mounted for rotation
within said tank and having an axis of
rotation whereby rotation of said auger
moves a food product along said helical
path from said inlet end of said tank to
said outlet end of said tank;
a volume of chilling water, wherein said
tank is filled with said volume of said
chilling water to a water level above said
shaft of said auger and below a top of
said at least one flight of said auger,
wherein an entirety of said inner surface
of said tank side walls is positioned par-
allel to said outer edges of said at least
6 JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC.
one flight of said auger and wherein said
entirety of said inner surface of said
tank side walls conforms closely to said
outer edges of said one or more flights of
said auger, thereby forcing said chilling
water to flow along said helical path
when said auger rotates and impeding a
flow of said chilling water between said
tank side walls and said outer edges of
said at least one flight of said auger
when said auger rotates;
means for removing the food product from
said outlet end;
means for discharging chilling water from
said inlet end of said tank;
refrigerating means external to said outer
surface of said tank for refrigerating the
chilling water discharged from said inlet
end of said tank; and
means for re-circulating chilling water
from said refrigerating means and in-
troducing chilling water into said outlet
end of said tank.
J.A. 44 col. 1 l. 49–col. 2 l. 22. Claim 2, the sole original
dependent claim, was not itself amended but is limited by
the newly added language to claim 1.
On June 19, 2014, twelve years after the ’622 patent
issued and just over a month after the reexamination
certificate issued, John Bean filed a complaint against
Morris for patent infringement in the U.S. District Court
for the Eastern District of Arkansas. J.A. 29–31. 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
JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC. 7
from the date it served Morris with the original complaint
on June 20, 2014. J.A. 140–45. John Bean did not allege
that Morris engaged in any infringing activity prior to the
issuance of the reexamination certificate, nor did John
Bean seek damages for any activity prior to the reexami-
nation certificate’s issuance. Id. On December 21, 2015,
Morris filed its answer and asserted, inter alia, the af-
firmative defenses of equitable estoppel, prosecution
laches, and absolute and equitable intervening rights.
J.A. 196.
On October 27, 2016, the district court issued a letter
to the parties requesting the parties’ positions on whether
Morris’s asserted defenses of laches and equitable estop-
pel could be dispositive of the case. J.A. 219. Based on
the parties’ agreement that a ruling on these defenses
may be dispositive, the district court ordered summary
judgment briefing on these two issues. J.A. 229.
On December 14, 2016, the district court granted
summary judgment in favor of Morris. John Bean Techs.
Corp. v. Morris & Assocs., Inc., No. 4:14-CV-00368-BRW,
2016 WL 7974654, at *1 (E.D. Ark. Dec. 14, 2016). It held
that John Bean’s infringement action was barred by both
laches and equitable estoppel. Id. Relevant to this ap-
peal, the district court held that the Demand Letter
established that “by June 2002, [John Bean] knew that
[Morris] was selling a product that [John Bean] believe[d]
infringed on their ’622 patent.” Id. at *3. The district
court found that John Bean’s silence constituted mislead-
ing conduct because John Bean was aware that Morris
would continue to invest, develop, and sell its chillers
absent a response from John Bean. Id. In addition, the
district court found that based on the parties’ history of
patent litigation, John Bean’s “choice to not pursue a
patent-infringement claim for over twelve years is evi-
dence of misleading conduct.” Id. The district continued
to find that Morris relied on John Bean’s silence, and that
Morris would be materially prejudiced if John Bean was
8 JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC.
allowed to pursue its infringement action. Id. at *4. The
district court thus granted summary judgment in favor of
Morris, and entered final judgment.
John Bean appeals. We have jurisdiction under 28
U.S.C. § 1295(a).
DISCUSSION
A grant of summary judgment that equitable estoppel
bars an infringement action is reviewed in two steps.
Scholle Corp. v. Blackhawk Molding Co., 133 F.3d 1469,
1471 (Fed. Cir. 1998). First, we review de novo whether
the district court erred in finding no genuine issues of
material fact exist. Id. Second, we review the district
court’s application of equitable estoppel for abuse of
discretion. Radio Sys. Corp. v. Lalor, 709 F.3d 1124, 1130
(Fed. Cir. 2013) (“[T]he applicability of equitable estoppel
is ‘committed to the sound discretion of the trial judge.’”
(quoting A.C. Aukerman Co. v. R.L. Chaides Constr. Co.,
960 F.2d 1020, 1028 (Fed. Cir. 1992) (en banc), abrogated
on other grounds by SCA Hygiene, 137 S. Ct. at 959)).
Equitable estoppel serves as an absolute bar to a pa-
tentee’s infringement action. Aukerman, 960 F.2d at
1041. The defense consists of three elements: (1) the
patentee engages in misleading conduct that leads the
accused infringer to reasonably infer that the patentee
does not intend to assert its patent against the accused
infringer; (2) the accused infringer relies on that conduct;
and (3) as a result of that reliance, the accused infringer
would be materially prejudiced if the patentee is allowed
to proceed with its infringement action. Scholle, 133 F.3d
at 1471. Misleading conduct may include the patentee’s
“specific statements, action, inaction, or silence where
there was an obligation to speak.” Id.This case presents an unusual situation where the
district court has found that equitable estoppel bars an
infringement action based on activity prior to the issuance
JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC. 9
of the asserted reexamination claims. Here, the reex-
amined claims did not exist in their present form in 2002
at the time Morris sent the Demand Letter to John Bean.
These claims first issued in May 2014 following reexami-
nation. We have no precedent that presents this factual
scenario and provides a clear solution. Under the circum-
stances presented here, we find that the district court
abused its discretion in extending equitable estoppel to
the reexamined claims.
Our resolution of this matter lies in the principles un-
dergirding the issuance of reexamination claims. First,
claims amended and issued during reexamination cannot
be broader than the original claims. 35 U.S.C. § 305; 37
C.F.R. § 1.552(b). While claim broadening can result in
the invalidation of the claims under § 305, claim narrow-
ing means that the scope of what is and is not an infring-
ing product can change. See Predicate Logic, Inc. v.
Distributive Software, Inc., 544 F.3d 1298, 1302 (Fed. Cir.
2008). And when claims are narrowed during reexamina-
tion to overcome prior art, as is the case here, any validity
analysis of the newly issued claims differs from that of the
original broader claims. Thus, Morris’s challenge to the
validity of the ’622 patent claims in the Demand Letter
may no longer be accurate. Indeed, it would not be wrong
for John Bean to narrow its claims in response to the
Demand Letter.
Second, and correlatively, a patentee cannot assert
reexamination claims to obtain damages prior to the
issuance date of the reexamination certificate unless the
reexamined claims are identical in scope to the original
claims. Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346
(Fed. Cir. 1998) (“A patentee of a reexamined patent is
entitled to infringement damages, inter alia, for the
period between the date of issuance of the original claims
and the date of issuance of the reexamined claims if the
original and reexamined claims are ‘identical.’”). Reex-
amined claims are considered “identical” to the original
10 JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC.
claims if they are not substantively changed, i.e., when
the amended claim “clarifies the text of the claim or
makes it more definite without affecting its scope.” Bloom
Eng’g Co. v. N. Am. Mfg. Co., 129 F.3d 1247, 1250 (Fed.
Cir. 1997); see Laitram, 163 F.3d at 1346 (citing Seattle
Box Co. v. Indus. Crating & Packing, 731 F.2d 818, 827–
28 (Fed. Cir. 1984)). If the reexamined claims contain
substantive changes to the original claims, then the
patentee is only entitled to damages for the period after
the reexamination certificate issues. Laitram, 163 F.3d at1346 (citing Bloom, 129 F.3d at 1249–50).
In this case, the amendments made during reexami-
nation were both substantial and substantive. Compare
J.A. 42, with J.A. 44–45. For example, newly added
claim 3 contains a limitation reciting that the means for
removing the food product comprises an “unloader.” And
the only mention of an “unloader” in the patent specifica-
tion was, like claim 3, added during reexamination
through incorporating another patent application by
reference. See J.A. 44 (adding language to the specifica-
tion). It is also immediately apparent that amended
claim 1 includes new limitations added during reexamina-
tion, for example, the limitation of chilling water at a
level above the shaft of the auger. J.A. 44.
Lastly, our resolution of this case is supported by our
precedent holding that the defense of equitable estoppel
does not apply to pending claims during the examination
of a patent application. Radio Sys., 709 F.3d at 1131. In
Radio Systems, we held that equitable estoppel could not
apply to pending patent claims even if those claims when
issued could claim priority to a parent patent subject to
equitable estoppel. Id. The reasoning behind this rule is
that claims that have not issued cannot be asserted, and
therefore no misleading conduct or silence could be pre-
sent. Id. In other words, for claims that have not issued,
there is no case or controversy and therefore “the ele-
ments of equitable estoppel are not present.” Id. Here,
JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC. 11
because the asserted claims did not exist at, or were
substantively altered since, the time Morris sent John
Bean the Demand Letter, John Bean could not have
engaged in misleading conduct or silence with respect to
those claims.
There may be other cases where the reexamined
claims contain fewer amendments and narrower added
claims such that the reexamined claims do not differ in
scope from the original claims. In those instances, the
asserted claims may possibly be considered identical for
purposes of infringement, and consequently, for purposes
of applying equitable estoppel. But that is not the case
here. We therefore find that the district court abused its
discretion in applying equitable estoppel to bar John
Bean’s infringement action asserting the reexamined
claims. 2
2 Our resolution of this case does not mean that
Morris wholly lacks any recourse in equity for John
Bean’s twelve-year delay in asserting the ’622 patent.
Specifically, the affirmative defenses of absolute and
equitable intervening rights may serve to prevent John
Bean from enforcing the ’622 patent against Morris. See
35 U.S.C. §§ 252, 307; Marine Polymer Techs., Inc. v.
HemCon, Inc., 672 F.3d 1350, 1362 (Fed. Cir. 2012) (en
banc) (“[A]fter a patent emerges from reexamination,
[§307(b)] makes available absolute and equitable inter-
vening rights . . . with respect to ‘amended or new’ claims
in the reexamined patent.”); see also Shockley v. Arcan,
Inc., 248 F.3d 1349, 1359–61 (Fed. Cir. 2001). Although
we decline to apply those defenses for the first time on
appeal, as Morris asserted these defenses in its answer,
the district court is free to entertain them on remand.
J.A. 196.
12 JOHN BEAN TECHS. v. MORRIS & ASSOCS. INC.
CONCLUSION
The district court abused its discretion by applying
equitable estoppel to bar John Bean’s infringement action
without considering how the ex parte reexamination
affected the ’622 patent claims. Because the 2014 reex-
amination resulted in substantive amendments that
narrowed the original claims’ scope as well as the addition
of substantively new claims, we find that equitable estop-
pel cannot apply based on the 2002 Demand Letter chal-
lenging the validity of the original claims. Accordingly,
we reverse the district court’s grant of summary judgment
based on equitable estoppel and laches, and remand for
further proceedings consistent with this opinion.
REVERSED AND REMANDED
COSTS
No costs.