Hvlpo2, LLC v. Oxygen Frog, LLC

Case: 19-1649 Document: 53 Page: 1 Filed: 02/05/2020
United States Court of Appeals
for the Federal Circuit
______________________
HVLPO2, LLC,
Plaintiff-Appellant
v.
OXYGEN FROG, LLC, SCOTT D. FLEISCHMAN,
Defendants-Appellees
______________________
2019-1649
______________________
Appeal from the United States District Court for the
Northern District of Florida in No. 4:16-cv-00336-MW-
CAS, Judge Mark E. Walker.
______________________
Decided: February 5, 2020
______________________
MARTIN BRUCE SIPPLE, Ausley McMullen, Tallahassee,
FL, argued for plaintiff-appellant. Also represented by
ALEXANDRA AKRE; NICHOLAS R. GRENNAN, Suiter Swantz
PC LLO, Omaha, NE.
ROBERT HUNTSMAN, Huntsman Law Group, PLLC, Au-
rora, CO, argued for defendants-appellees.
______________________
Case: 19-1649 Document: 53 Page: 2 Filed: 02/05/2020
2 HVLPO2, LLC v. OXYGEN FROG, LLC
Before NEWMAN, MOORE, and CHEN, Circuit Judges.
MOORE, Circuit Judge.
HVLPO2, LLC (HVO) sued Oxygen Frog, LLC and its
CEO, Scott Fleischman (collectively, Oxygen Frog) in the
Northern District of Florida for infringement of the claims
of U.S. Patent Nos. 8,876,941 and 9,372,488. A jury con-
cluded that claims 1 and 7 of both the ’941 and ’488 patents,
the only claims tried, would have been obvious under 35
U.S.C. § 103. After the jury verdict, HVO moved for judg-
ment as a matter of law that Oxygen Frog had failed to es-
tablish obviousness, or in the alternative, for a new trial
based on the admission of lay opinion testimony on the is-
sue of obviousness. The district court denied HVO’s mo-
tion, and HVO appealed. Because the district court abused
its discretion by admitting lay witness testimony regarding
obviousness, we reverse and remand for a new trial.
BACKGROUND
The ’941 and ’488 patents share a specification and are
directed to methods and devices for controlling an oxygen-
generating system, which is used to sustain and manage
airflow for torch glass artists who use surface mix glass
torches. See ’488 patent at 1:32–33. Claim 1 of the ’488
patent is illustrative:
1. An apparatus for managing an oxygen generat-
ing system, the oxygen generating system config-
ured for supplying a sustained flow of a gaseous
mixture comprising mostly oxygen, the apparatus
comprising:
a controller device configured to:
receive a first pressure signal asso-
ciated with a first pressure;
determine the first pressure to be
less than or equal to a startup
threshold pressure, said first
Case: 19-1649 Document: 53 Page: 3 Filed: 02/05/2020
HVLPO2, LLC v. OXYGEN FROG, LLC 3
pressure associated with a gaseous
pressure of an oil-less tank;
send a signal to switch a first cir-
cuit on, said first circuit for provid-
ing electrical power to a bank of at
least two oxygen generators;
send a signal to switch a second cir-
cuit on, said second circuit for
providing electrical power to an oil-
less air compressor;
receive a second pressure signal as-
sociated with a second pressure;
determine the second pressure to
be greater than or equal to a
shutoff threshold pressure, said
second pressure associated with a
gaseous pressure of the oil-less
tank;
send a signal to switch the first cir-
cuit off; and
send a signal to switch the second
circuit off.
The district court granted partial summary judgment, find-
ing Oxygen Frog infringed claims 1 and 7 of both the ’941
and ’488 patents. The case then proceeded to a jury trial to
assess, among other things, validity of those claims.
At trial, Oxygen Frog argued that the claims were ob-
vious in view of a combination of two prior art references:
the “Cornette reference,” which is a post on a glass blowing
internet forum depicting an oxygen system used for glass
blowing, and the “Low Tide video,” which is a video that
was posted online by Tyler Piebes, a glass blowing artist.
Mr. Piebes was not qualified as an expert witness, but did
provide deposition testimony as a fact witness, most of
Case: 19-1649 Document: 53 Page: 4 Filed: 02/05/2020
4 HVLPO2, LLC v. OXYGEN FROG, LLC
which was played at trial before the jury. HVO objected to
Mr. Piebes’ testimony regarding obviousness as improper
expert opinion testimony. J.A. 100–02. The district court
recognized that HVO was objecting to Mr. Piebes offering
an opinion on obviousness. In fact, the district court quoted
one of the questions and answers which was specifically ob-
jected to:
Question: “Did you think that modifying the Cor-
nette system to support two circuits to be obvious?”
Answer: “Yes, I did.”
J.A. 100. The district court overruled the objection, and
instead gave the jury a limiting instruction prior to playing
Mr. Piebes’ deposition testimony. J.A. 102. The district
court’s limiting instruction instructed the jury that “a wit-
ness such as Mr. Piebes certainly can offer his observations
and explain to you how a system works and what he thinks
would occur to him from his perspective would or would not
be obvious.” S.A. 818. It further instructed the jury that
such testimony is “not the ultimate question” of obvious-
ness and that it was up to the jury to decide obviousness.
Id. Mr. Piebes’ testimony was then played for the jury, in-
cluding his testimony about what he would have consid-
ered obvious. J.A. 704, 708–09.
After trial, the jury entered a verdict that claims 1 and
7 of the ’488 and ’941 patents would have been obvious to a
person of ordinary skill in the art. HVO filed a motion for
judgment as a matter of law, or in the alternative, for a new
trial, which the district court denied. HVO appeals. We
have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
DISCUSSION
We first consider the district court’s denial of HVO’s
motion for a new trial. The denial of a new trial is reviewed
under regional circuit law. Wordtech Sys., Inc. v. Inte-
grated Networks Sols., Inc., 609 F.3d 1308, 1312 (Fed. Cir.
2010). In the Eleventh Circuit, a decision on a motion for
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HVLPO2, LLC v. OXYGEN FROG, LLC 5
a new trial is reviewed for an abuse of discretion. Williams
v. City of Valdosta, 689 F.2d 964, 974 (11th Cir. 1982).
The district court rejected HVO’s argument that a new
trial was warranted based on Mr. Piebes’ deposition testi-
mony regarding obviousness. The district court held that
it was not an error to admit such testimony. J.A. 23. And
it determined that Mr. Piebes’ testimony did not substan-
tially prejudice HVO, especially in light of its limiting in-
struction to the jury. Id. Under the circumstances here,
that determination was plainly wrong; the district court’s
limiting instruction was insufficient to cure the substantial
prejudice caused by Mr. Piebes’ testimony. Thus, the dis-
trict court abused its discretion by denying the motion for
a new trial.
Admission of Mr. Piebes’ testimony opining that it
would be “obvious” to modify a prior art system in a partic-
ular way that would match the claimed invention was im-
proper. Federal Rule of Evidence 702 provides that:
A witness who is qualified as an expert by
knowledge, skill, experience, training, or education
may testify in the form of an opinion or otherwise
if:
(a) the expert’s scientific, technical, or other spe-
cialized knowledge will help the trier of fact to un-
derstand the evidence or to determine a fact in
issue; . . .
This precisely describes testimony which would pertain to
an obviousness invalidity challenge in a patent trial. It is
often helpful to have a technical expert explain for exam-
ple, the scope of the prior art or motivations for combining
various components. Obviousness and each of its underly-
ing components are analyzed from the perspective of a per-
son of skill in the art. KSR Int’l Co. v. Teleflex Inc., 550
U.S. 398, 420 (2007). Issues of infringement and validity
“are analyzed in great part from the perspective of a person
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6 HVLPO2, LLC v. OXYGEN FROG, LLC
of ordinary skill in the art,” such that a witness who is “not
‘qualified as an expert by knowledge, skill, experience,
training, or education’ in the pertinent art . . . [cannot] ‘as-
sist the trier of fact to understand the evidence or to deter-
mine a fact in issue.’” Sundance, Inc. v. DeMonte
Fabricating Ltd., 550 F.3d 1356, 1361–62 (Fed. Cir. 2008)
(quoting Fed. R. Evid. 702). Thus, “it is an abuse of discre-
tion to permit a witness to testify as an expert on the issues
of noninfringement or invalidity unless that witness is
qualified as an expert in the pertinent art.” Id. at 1363.
The prohibition of unqualified witness testimony extends
to the ultimate conclusions of infringement and validity as
well as to the underlying technical questions. “[A] witness
not qualified in the pertinent art [may not] testify as an
expert on obviousness, or any of the underlying technical
questions, such as the nature of the claimed invention, the
scope and content of the prior art, the differences between
the claimed invention and the prior art, or the motivation
of one of ordinary skill in the art to combine these refer-
ences to achieve the claimed invention.” Id. at 1364 (foot-
note omitted).
The Federal Rules of Evidence and those of Civil Pro-
cedure carefully govern expert testimony. Federal Rule of
Civil Procedure 26 requires for example that experts be dis-
closed to the opposing party along with a written report
which contains all opinions of the expert, the reasons and
bases for those opinions, and all facts relied upon in the
formation of the opinion. Fed. R. Civ. P. 26(a)(2). HVO was
not provided with any such disclosure of Mr. Piebes. Oxy-
gen Frog argues that it did not have to comply with the
Rules regarding experts because Mr. Piebes was not prof-
fered as an expert. Oxygen Frog argues that Mr. Piebes’
testimony was lay testimony regarding Mr. Piebes’ percep-
tion and experience. According to Oxygen Frog a lay wit-
ness should be permitted to testify that modifying one of
the prior art references to include additional claimed fea-
tures would have been obvious. We do not agree, because
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HVLPO2, LLC v. OXYGEN FROG, LLC 7
Mr. Piebes’ opinion testimony was directed to the central
legal and technical question at trial: whether HVO’s as-
serted patent claims were invalid for obviousness. This
testimony from Mr. Piebes is thus in the clear purview of
experts and lay witness testimony on such issues does not
comply with the Federal Rules of Evidence or Civil Proce-
dure.
Mr. Piebes’ testimony, which is directed to the conclu-
sion of obviousness and its underlying technical questions,
is the province of qualified experts, not lay witnesses. See,
e.g., J.A. 704 (“Q. Did you think that modifying the Cor-
nette system to support two circuits to be obvious? A. Yes,
I did.”); J.A. 708 (“Q. So would you consider it obvious if you
have a pressure switch with instructions, a two pole pres-
sure switch with instructions to wire it to turn on and off
two circuits? A. Yes.”). Mr. Piebes’ testimony was therefore
inadmissible.
Oxygen Frog also argues that, to the extent admitting
Mr. Piebes’ testimony was improper, the error was harm-
less and the district court cured any prejudicial effect by
providing a limiting jury instruction. 1 We do not agree. In
the Eleventh Circuit, evidentiary errors require a new trial
1 Oxygen Frog also argues that any error associated
with the admission of Mr. Piebes’ testimony was harmless
“because the jury did not decide the ultimate issue of obvi-
ousness and invalidity . . . [and any] prejudice was cured
by the Court because the Court made its own independent
analysis of obvious[ness].” Appellees’ Br. at 33–34. Alt-
hough the issue of obviousness is a legal one, it is an issue
that may be properly submitted to, and decided by a jury.
See R.R. Dynamics, Inc. v. A. Stucki Co., 727 F.2d 1506,
1515 (Fed. Cir. 1984). A district court’s decision on a mo-
tion for judgment as a matter of law after a jury verdict of
obviousness is not an independent inquiry. It does not con-
vert the jury verdict into a bench trial.
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8 HVLPO2, LLC v. OXYGEN FROG, LLC
“where the error has caused substantial prejudice to the
affected party (or . . . affected the party’s ‘substantial
rights’ or resulted in ‘substantial injustice’).” Peat, Inc. v.
Vanguard Research, Inc., 378 F.3d 1154, 1162 (11th Cir.
2004). Here, the jury returned a verdict that claims 1 and
7 of both the ’941 and ’488 patents would have been obvious
to a person of ordinary skill in the art. There is no way to
know whether Mr. Piebes’ improper testimony provided
some or all of the basis for the jury’s decision. Not only did
the district court’s admission of Mr. Piebes’ improper testi-
mony deprive HVO of its right to have the question of obvi-
ousness decided based on admissible, qualified expert
testimony, it prejudiced HVO by not affording it the appro-
priate procedures for testing such testimony. See, e.g., Fed.
R. Civ. P. 26 (a)(2), (e). Those opinions are also subject to
challenge under Daubert v. Merrell Dow Pharm., Inc., 509
U.S. 579 (1993). Because expert testimony on ultimate is-
sues carries with it the potential to significantly impact a
jury’s decision, “the expert witness discovery rules are de-
signed to allow both sides in a case to prepare their cases
adequately and to prevent surprise.” Reese v. Herbert, 527
F.3d 1253, 1266 (11th Cir. 2008). Mr. Piebes was not dis-
closed as an expert, and his testimony as to obviousness
was not disclosed pursuant to expert discovery rules. Thus,
HVO was significantly prejudiced by the testimony on the
ultimate question of obviousness, which should only have
been given by a qualified expert witness, with the expert
discovery necessary to prepare its case and ensure the re-
liability and relevance of the testimony. This is not harm-
less error.
Although it may be possible for the district court to cure
inadmissible testimony by, for example, instructing the
jury to disregard it, the limiting instruction in this case was
no cure. The district court cautioned the jury before the
deposition was played:
[Y]ou will decide as the fact-finder whether or not
it was or was not obvious. Just because somebody
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HVLPO2, LLC v. OXYGEN FROG, LLC 9
uses a word “obvious” when they testify, does not
mean that they are making the decision or it’s up
to them to make the decision. And so I want to re-
iterate that that’s a conclusion, decision that you
will have to make one way or the other when you
retire to begin your deliberations. With that said,
a witness such as Mr. Piebes certainly can . . . ex-
plain to you . . . what he thinks would occur to him
from his perspective would or would not be obvious.
S.A. 818. That instruction, however, improperly permits
the jury to consider Mr. Piebes’ testimony as evidence of
obviousness and its underlying technical questions. In
fact, this instruction—that it is for the jury, not a witness,
to decide obviousness—is no different than an instruction
for how a jury should consider expert testimony. Rather
than ensure that the jury did not rely on Mr. Piebes’ un-
qualified testimony regarding the issue of obviousness, the
district court’s instruction instead suggested that the jury
may consider and weigh Mr. Piebes’ testimony as to what
he considered obvious. Admission of that testimony sub-
stantially prejudiced the outcome of the case. The error
was not harmless and a new trial is necessary to correct it.
Accordingly, the district court abused its discretion by ad-
mitting Mr. Piebes’ testimony on the issue of obviousness
and by denying HVO’s motion for a new trial.
Having determined that the district court abused its
discretion by denying HVO’s motion for a new trial, and
that a new trial is necessary, we need not reach the other
issues presented on appeal.
CONCLUSION
Because the district court abused its discretion by ad-
mitting lay witness testimony regarding obviousness, we
reverse and remand for a new trial.
REVERSED AND REMANDED