Inventio Ag. v. Otis Elevator Co. ( 2012 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
__________________________
INVENTIO AG,
Plaintiff-Appellant,
v.
OTIS ELEVATOR COMPANY,
Defendant-Cross Appellant.
__________________________
2011-1615, 2012-1108
__________________________
Appeals from the United States District Court for the
Southern District of New York in case no. 06-CV-5377,
Judge Colleen McMahon.
__________________________
Decided: November 27, 2012
__________________________
JOSEPH R. RE, Knobbe, Martens, Olson & Bear, LLP,
of Irvine, California, argued for the plaintiff-appellant.
With him on the brief were JON W. GURKA, JOSEPH S.
CIANFRANI and CHERYL T. BURGESS; and KAREN V. WEIL
and REZA MIRZAIE, of Los Angeles, California.
ANDREW C. BAAK, Bartlit Beck Herman Palenchar &
Scott, LLP, of Chicago, Illinois, argued for the defendant-
INVENTIO AG v. OTIS ELEVATOR 2
cross appellant. With him on the brief were MARK L.
LEVINE and KATHERINE G. MINARIK. Of counsel was
STEPHEN J. COWEN.
__________________________
Before LINN, REYNA and WALLACH, Circuit Judges.
REYNA, Circuit Judge.
Inventio AG and Otis Elevator Co. (“Otis”) both seek
review of different parts of a judgment entered by the
United States District Court for the Southern District of
New York which followed a jury trial where Otis was
found to infringe Inventio’s patent. Because we conclude
that Inventio’s asserted patent is obvious as a matter of
law, and that the district court improperly denied Otis’
motion to that effect, we reverse-in-part, vacate-in-part,
and remand.
I. Background
In 1992, Schindler Elevator Corp., and its intellectual-
property holding company, Inventio AG (collectively
“Inventio”), introduced an elevator “destination dispatch-
ing” system where a user enters a destination floor on a
10-button keypad in the lobby or hallway before being
directed to a particular elevator to travel to that floor.
This obviated conventional requirements of pushing the
“up” or “down” button to call the elevator and pushing the
button for a particular floor once inside.
Before Inventio introduced its system, its head of re-
search and development, Dr. Joris Schroeder, published
an article in the March 1990 issue of Elevator World
entitled “Advanced Dispatching” (“the Schroeder Article”),
which described destination dispatching. Joint App’x at
4807-10. In addition to 10-button keypads, Dr. Schroe-
3 INVENTIO AG v. OTIS ELEVATOR
der’s article described a system where “cards are entered
into readers and will automatically register a destination
call for a specific floor.” Id. at 4808. By 1994, in addition
to the integrated circuit (IC) cards and magnetic-strip
cards disclosed in the Schroeder Article, other recognition
devices had been developed, including backscatter Radio
Frequency Identification (RFID), bar code, proximity card,
remote control, and capacitive coupling. Also in 1994,
Inventio refined its destination dispatching system,
replacing the cards with passenger-carried RFID trans-
mitters that allow the system to automatically recognize
the user and dispatch an elevator. Inventio named this
new system utilizing RFID cards “Schindler ID.”
In 1995, Inventio filed a patent application on its im-
proved destination dispatching system using RFID
transmitters. The patent, covering an “Elevator Installa-
tion,” issued as U.S. Patent No. 5,689,094 (“the ’094
patent”) on November 18, 1997. According to the ’094
patent, once the passenger brings an information trans-
mitter (e.g., a RFID transmitter) within range of a recog-
nition device,1 the device activates the transmitter, and
the transmitter sends a unique passenger identification
code to the device. ’094 patent col. 3 l. 22 to col. 4 l. 34.
Using an information storage device and a control device,
the system then identifies the user’s default destination
floor, calls an elevator, and informs the passenger of
which elevator to board. Id. The storage device can also
1 This court construed “information transmitter” to
mean “a device that communicates with a recognition
device via electromagnetic waves, after being actuated by
that recognition device,” and likewise “recognition device”
to mean “a device that actuates and reads data transmit-
ted by an information transmitter.” Schindler Elevator
Corp. v. Otis Elevator Co., 593 F.3d 1275, 1280, 1286
(Fed. Cir. 2010).
INVENTIO AG v. OTIS ELEVATOR 4
identify whether the passenger has access to certain
floors. Id. col. 4 ll. 58-63. Claim 1 of the ’094 patent is
illustrative:
An elevator installation having a plurality of ele-
vators comprising:
a recognition device for recognizing elevator calls
entered at an entry location by an information
transmitter carried by an elevator user, initializ-
ing the entry location as a starting floor of a jour-
ney;
a control device receiving the recognized elevator
call and allocating an elevator to respond to the
elevator call, through a predetermined allocating
algorithm;
a call acknowledging device comprising one of a
display device and an acoustic device to acknowl-
edge recognition of the elevator call and to com-
municate a proposed destination floor to the
elevator user;
the recognition device, mounted in the access area
in the vicinity of the elevators and spatially lo-
cated away from elevator doors, actuating the in-
formation transmitter and comprising a unit that
independently reads data transmitted from the in-
formation transmitter carried by the elevator user
and a storage device coupled between the unit and
the control device:
the recognition device one of transmitting pro-
posed destination floor data, based upon the data
transmitted from the information transmitter, to
the control device, and, transmitting elevator user
5 INVENTIO AG v. OTIS ELEVATOR
specific data. [sic] based upon individual features
of the elevator user stored in the storage device, to
the control device.
Id. at col. 6 ll. 10-36.2
In late 2002, Inventio’s competitor, Otis began devel-
oping its own destination dispatching system. Its engi-
neers reviewed a definitive article by Mr. Leo Port, who
first proposed the idea of destination dispatching in 1968.
In the fall of 2003, at the request of the site developer,
Larry Silverstein, Otis substituted its newly-developed
destination dispatching system, “Compass with Seamless
Entry,” for the conventional elevator installation Mr.
Silverstein had ordered for 7 World Trade Center. Otis
completed installation of this Compass system in 2006,
which made it the first destination-dispatching elevator
installation in the United States. Otis subsequently
installed Compass with Seamless Entry into seven other
buildings across the country.
In 2006, Inventio sued Otis for infringement of the
’094 patent, asserting independent claims 1 and 14 as
well as dependent claims 2, 7, 9, 11, 12, and 13. The court
construed the claims and granted Otis’ motion for sum-
mary judgment of noninfringement based on its construc-
tion. See Schindler Elevator Corp. v. Otis Elevator Co.,
586 F. Supp. 2d 231 (S.D.N.Y. 2008). This court reversed
the pertinent portions of the district court’s claim con-
2 The other independent claim at issue, claim 14,
only differs from claim 1 in that the last limitation (i.e.,
“the recognition device one of . . .”) is replaced by the
following limitation: “the recognition device transmitting
the data through the storage device and to the control
device.” Compare ’094 patent col. 6 ll.10-36, with col.7 l.3
to col.8 l.11.
INVENTIO AG v. OTIS ELEVATOR 6
struction and vacated its corresponding noninfringement
decision. Schindler Elevator Corp. v. Otis Elevator Co.,
593 F.3d 1275 (Fed. Cir. 2010).3
On remand, the district court bifurcated the liability
and damages phases of the trial. In the first phase of the
trial dealing with infringement and validity, Otis at-
tempted to show that the ’094 patent was obvious in view
of the Schroeder Article in combination with prior art
teaching the use of RFID card readers (“RFID prior art”).
Both parties treated the validity of the dependent claims
as rising and falling with the independent ones.
The RFID prior art Otis offered included U.S. Patent
Nos. 5,030,807 (“Landt”), which discloses a toll collection
system (e.g., EZPass) using backscatter RFID tags, and
4,822,990 (“Tamada”), which describes the use of cards
that communicate via electromagnetic waves to open
admissions gates at events like the Olympics To the
extent the other references did not disclose a “storage
device coupled between the [recognition device] and the
control device” as required by claims 1 and 14, Otis of-
fered Yamagishi, a published Japanese patent applica-
tion, which discloses incorporating a database that stores
passenger details into a system that uses cards to place
elevator calls.
Inventio’s expert, Dr. Eric Dowling, opined that the
’094 patent was nonobvious, but admitted that the RFID
prior art would have been known to persons of ordinary
skill in the art when the patent was filed in 1994. In this
3 This court did not consider the district court’s con-
struction of “coupled between” to mean “linked directly”
because the district court did not reach Otis’ alternative
noninfringement theory based on this construction.
Schindler, 593 F.3d at 1287.
7 INVENTIO AG v. OTIS ELEVATOR
regard, the court charged the jury: “To qualify as prior art
relative to the ’094 patent[,] references must be reasona-
bly related to the claimed invention in the patent. A
reference is reasonably related if it is in the same field as
the claimed invention or is from another field to which a
person of ordinary skill in the art would look to try to
solve a known problem.” Joint App’x at 1135. According
to the court, Inventio did not dispute that a number of
items qualified as prior art, including Landt, Tamada,
and Yamagishi. Notwithstanding the court’s charge, the
jury upheld the validity of the ’094 patent as nonobvious.
The jury also found that Otis infringed every asserted
claim, literally and under the doctrine of equivalents, and
that Otis induced or contributed to infringement at each
infringing installation. Otis moved for judgment as a
matter of law (JMOL) concerning invalidity and nonin-
fringement, but the court denied those motions.
While the jury was deliberating following the liability
trial, the court reaffirmed an earlier damages ruling that
effectively eviscerated Inventio’s damages case. Inventio
had no alternative theories on which to rely. Rather than
pursue a de minimis damages award, Inventio opted to
forgo the damages trial. The court also refused to enter a
broad injunction proposed by Inventio, instead adopting
Otis’ narrower proposal. Dissatisfied with the damages
ruling and the scope of the district court’s injunction,
Inventio appealed to this court.4 Otis cross-appealed the
judge’s denial of its JMOL motions on invalidity and
noninfringement. We have jurisdiction over these con-
solidated appeals pursuant to 28 U.S.C. §§ 1291,
1292(c)(1), and 1295(a)(1).
4 Because we conclude that the ’094 patent is inva-
lid, we do not address the issues Inventio raises related to
the damages calculation and the scope of the injunction.
INVENTIO AG v. OTIS ELEVATOR 8
II. Standard of Review
Obviousness is a question of law, so this court “re-
view[s] the jury’s conclusions . . . without deference, and
the underlying findings of fact, whether explicit or im-
plicit within the verdict, for substantial evidence.” Boston
Scientific Scimed, Inc. v. Cordis Corp., 554 F.3d 982, 990
(Fed. Cir. 2009). Because a special verdict or interrogato-
ries were not used, this court must review the jury’s
implicit factual findings for substantial evidence and
assume that the jury found all factual questions in favor
of Inventio. Kinetic Concepts, Inc. v. Smith & Nephew,
Inc., 688 F.3d 1342, 1359–60 (Fed. Cir. 2012); see also
Kinetic Concepts, Inc. v. Blue Sky Med. Grp., 554 F.3d
1010, 1021 (Fed. Cir. 2009). Otis is challenging the jury’s
nonobviousness determination on a JMOL motion so it
must show that “there [is] no legally sufficient evidentiary
basis for a reasonable jury to find in favor of the non-
moving party.” Nimely v. City of New York, 414 F.3d 381,
390 (2d Cir. 2003) (quoting Fed. R. Civ. P. 50(a)) (internal
quotation marks omitted).
III. Discussion
“A claimed invention is unpatentable if the differences
between it and the prior art are such that the subject
matter as a whole would have been obvious at the time
the invention was made to a person having ordinary skill
in the pertinent art.” Tokai Corp. v. Easton Enters. Inc.,
632 F.3d 1358, 1366 (Fed. Cir. 2011) (citing 35 U.S.C.
§ 103(a) (2006)). While the ultimate ruling on this issue
is a matter of law, that ruling necessarily depends on
factual findings. See Boston Scientific, 554 F.3d at 990.
The underlying factual inquiry in an obviousness deter-
mination includes four factors: the scope and content of
the prior art; the differences between the prior art and
9 INVENTIO AG v. OTIS ELEVATOR
the claims at issue; the level of ordinary skill in the
pertinent art; and secondary conditions of nonobviousness
such as commercial success, long-felt but unsolved need,
and the failure of others. Graham v. John Deere Co., 383
U.S. 1, 17 (1966). Other factual questions concern the
presence or absence of a motivation to combine, and
whether a reference constitutes analogous prior art. See
In re Bigio, 381 F.3d 1320, 1324 (Fed. Cir. 2004). Obvi-
ousness must be proven by clear and convincing evidence.
Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2242
(2011). The parties focus their arguments on the scope
and content of the art, the differences between the prior
art and the claims, and secondary considerations. We
address each in turn.
Inventio argues that the Schroeder Article makes no
mention of RFID cards, so it discloses neither an informa-
tion transmitter nor a recognition device as required by
the independent claims. But as Inventio’s expert admit-
ted, RFID card readers were widely known when the ’094
patent was filed, and Otis introduced examples such as
Landt and Tamada. Inventio contends, however, that
Landt and Tamada are nonanalogous art, do not concern
the same problem addressed by the ’094 patent, and thus
are not eligible prior art. As we have observed, “[a]
reference qualifies as prior art for an obviousness deter-
mination under § 103 only when it is analogous to the
claimed invention.” In re Klein, 647 F.3d 1343, 1348 (Fed.
Cir. 2011). When a reference is from a field of endeavor
different from the patent, it must be “reasonably perti-
nent to the particular problem with which the inventor is
involved.” Innovention Toys, LLC v. MGA Entm’t, Inc.,
637 F.3d 1314, 1321 (Fed. Cir. 2011) (quoting In re Bigio,
381 F.3d at 1325). As Inventio’s expert admitted, a
skilled artisan would no doubt be aware of the RFID prior
art that disclosed seamlessly controlling access to sport-
INVENTIO AG v. OTIS ELEVATOR 10
ing events and toll roads. So how could it not “logically . .
. commend[] itself to [the ’094] inventor’s attention in
considering his problem” of seamlessly controlling access
to elevators? See id.; see also Wyers v. Master Lock Co.,
616 F.3d 1231, 1238 (Fed. Cir. 2010). We need not decide
the question because, based on the jury charge, a reason-
able juror could not conclude that the RFID prior art was
nonanalogous.
After instructing the jury on the standard for prior
art, and within that definition, analogous prior art, the
court clearly stated that “the parties don’t dispute a
number of items of prior art . . . [including] . . . the Landt
patent, the Tamada patent, . . . and Yamagishi patent
application.” Joint App’x at 1135–36 (emphasis added).
In light of this instruction, a reasonable juror would have
to find that not only were Landt and Tamada prior art,
they were also analogous prior art. Inventio maintains
that it only agreed to the “prior-ness” of the art; that is,
that it existed before the ’094 patent’s critical date. But
its stipulation reflected in the court’s jury instruction
suggests otherwise, and it is to that stipulation Inventio
is bound. Fisher v. First Stamford Bank & Trust Co., 751
F.2d 519, 523 (2d Cir. 1984) (“[A] stipulation of fact that is
fairly entered into is controlling on the parties and the
court is bound to enforce it.”). Furthermore, Inventio did
not object to the court’s clear jury instruction, thereby
waiving any later challenge. John Wiley & Sons, Inc. v.
Kirtsaeng, 654 F.3d 210, 223 (2d Cir. 2011) (“[F]ailure to
object to a jury instruction . . . prior to the jury retiring
results in a waiver of that objection.” (alteration in origi-
nal)), cert. granted, 132 S. Ct. 1905 (2012); Funai Electric
Co. v. Daewoo Elecs. Corp., 616 F.3d 1357, 1374 (Fed. Cir.
2010); see also Fed. R. Civ. P. 51.
11 INVENTIO AG v. OTIS ELEVATOR
Because the jury should have found the RFID prior
art analogous, the conclusion becomes inescapable that
’094 patent is a clear example of a “combination of famil-
iar elements according to known methods [yielding] no
more than . . . predictable results.” KSR Int’l Co. v.
Teleflex Inc., 550 U.S. 398, 415 (2007). In particular, the
Schroeder Article discloses a destination dispatching
system using card reader technology while the RFID prior
art discloses the required information transmitter and
recognition device in the form of a RFID transmitter and
receiver. Because RFID, along with IC, bar code, prox-
imity, magnetic strip, remote control, and capacitive
coupling, were among the “number of identified, predict-
able solutions, a person of ordinary skill ha[d] good reason
to pursue the[se] known options within his or her techni-
cal grasp.” Id. at 421. Replacing the older card reader in
the Schroeder Article’s destination dispatching system
with the modern RFID transmitter was well within the
abilities of a person of ordinary skill in the art. Leapfrog
Enters. v. Fisher-Price, Inc., 485 F.3d 1157, 1161 (Fed.
Cir. 2007) (“Applying modern electronics to older me-
chanical devices has been commonplace in recent years.”);
see also Western Union Co. v. MoneyGram Payment Sys.,
626 F.3d 1361, 1369–70 (Fed. Cir. 2010) (overturning a
jury’s nonobviousness verdict when the claimed invention
simply replaced a fax machine with a more sophisticated
keypad and interface in an otherwise known system for
making money transfers). Rather than a product of
innovation, the ’094 patent becomes an application “of
ordinary skill and common sense” that was obvious to try
and had a reasonable expectation of success. KSR, 550
U.S. at 421; Wyers, 616 F.3d at 1242. A reasonable juror
could not conclude otherwise.
To the extent Inventio argues that the jury could have
found that the combination of the Schroeder Article and
INVENTIO AG v. OTIS ELEVATOR 12
the RFID prior art does not disclose a “storage device
coupled between the [recognition device] and the control
device,” it is incorrect. The Schroeder Article itself dis-
closed the idea of integrating a security database into the
destination dispatching system, which could be linked to
the elevator supervisory controller. Another prior art
reference Inventio stipulated to, Yamagishi, unquestiona-
bly discloses a database that stores passenger details into
a system that uses cards to place elevator calls. Inventio
cannot overcome this art by suggesting that the claim
limitation requires a particular arrangement of elements
when the district court construed “coupled between” to
mean “linked directly,” which is the precise arrangement
disclosed in the Schroeder Article. See Schindler Elevator
Corp. v. Otis Elevator Co., 561 F. Supp. 2d 352, 365
(S.D.N.Y. 2008). A juror could not reasonably conclude
that the prior art does not disclose this limitation.
Secondary considerations do not alter our conclusion.
Inventio asserts that commercial success, industry praise,
and failure of others suggest that the ’094 patent is
nonobvious. Regarding commercial success, Inventio
merely identified the number of Schindler ID® units sold,
but “evidence related solely to the number of units sold
provides a very weak showing of commercial success, if
any.” In re Huang, 100 F.3d 135, 140 (Fed. Cir. 1996). It
also failed to establish a nexus between the patented
invention and either commercial success or industry
praise. Western Union, 626 F.3d at 1372–73 (Fed. Cir.
2010) (“[T]he patentee must establish a nexus between
the evidence of commercial success and the patented
invention.”). In particular, Inventio did not link the sales
or praise directly to the patented feature as opposed to
destination dispatching more generally. Inventio’s evi-
dence of failure of others is likewise insubstantial, point-
ing to a single contemporaneous patent application filed
13 INVENTIO AG v. OTIS ELEVATOR
by an Otis employee claiming something other than
destination dispatching with RFID technology. Whatever
this may be evidence of, it is not substantial evidence of
failure of others. In sum, we conclude that the ’094
patent is obvious as a matter of law and the jury’s verdict
to the contrary lacks substantial evidentiary support.
IV. Conclusion
Because the ’094 patent is invalid for obviousness as a
matter of law, we reverse the district court’s denial of
Otis’ JMOL motion. Given our holding on the issue of
obviousness, the other issues appealed by the parties are
moot. Accordingly, we vacate the remainder of the dis-
trict court’s decision and remand for further proceedings
consistent with this opinion.
REVERSED-IN-PART, VACATED-IN-PART, AND
REMANDED
COSTS
Costs to Otis.