United States: District Court Erred In Not Construing Claims For Contempt Motion Where There Was No Prior Claim Construction Because Infringement Had Been Conceded

In Proveris Scientific Corp. v. Innovasystems, Inc., Nos. 13-1166, -1190 (Fed. Cir. Jan. 13, 2014), the Federal Circuit held that the district court erred in failing to construe disputed claim language.  The Court thus vacated the district court's order holding Innovasystems, Inc. ("Innova") in contempt of an injunction against continued infringement, vacated the accompanying award of sanctions, and remanded the case for claim construction and renewed contempt proceedings.

Proveris Scientific Corporation ("Proveris") holds U.S. Patent No. 6,785,400 ("the '400 patent"), which claims an apparatus for observing and analyzing aerosol spray plumes generated in the delivery of drugs through spray devices.  Proveris previously sued Innova for infringement of the '400 patent, based on Innova's manufacture and sale of its Optical Spray Analyzer ("OSA") device.  Innova conceded infringement of claims 3-10 and 13, but disputed infringement of claims 1 and 2.  The district court found that the '400 patent was not invalid, and a jury found no infringement of claims 1 and 2, and that no damages had been proven.  Based on the conceded infringement of other claims, however, the district court granted a permanent injunction against Innova, and the Federal Circuit affirmed.

Innova introduced a new product, the Aerosol Drug Spray Analyzer ("ADSA"), which Innova claimed did not infringe independent claim 3 of the '400 patent.  According to Innova, where the OSA allowed a user to identify a range of images for analysis before activating the spray plume, the ADSA required that the spray plume be activated first, followed by the identification of images for analysis.  Innova argued that the ADSA is noninfringing because the preamble of claim 3 specifies that image data may be captured "at a predetermined instant in time."  Slip op. at 3.

Proveris filed a contempt motion based on Innova's manufacture and sale of the ADSA.  During the contempt proceeding, the district court declined to construe claim 3, reasoning that Innova could have but did not raise claim construction issues in the underlying infringement action.  Similarly, the district court did not allow Innova to raise any new invalidity arguments, reasoning that Innova had already attempted to challenge the validity of claim 3 during the underlying infringement action.  The district court found that Innova's violation of the injunction was willful, entered a contempt order against Innova, and awarded sanctions.  Innova appealed the contempt order and award of sanctions, and Proveris
cross-appealed portions of the sanctions ruling.

"It is true that we have previously held that in contempt proceedings, 'out of fairness, the district court is bound by any prior claim construction that it had performed in [this] case.'  However, here, there was no prior claim construction because Innova had conceded infringement."  Slip op. at 7 (quoting TiVo, Inc. v. EchoStar Corp., 646 F.3d 869, 883 (Fed. Cir. 2011) (en banc)).

On appeal, the Federal Circuit analyzed whether Innova violated the injunction under the two-part test set forth in TiVo, Inc. v. EchoStar Corp., 646 F.3d 869 (Fed. Cir. 2011) (en banc).  First, the Court assessed whether the new ADSA product was "not more than colorably different" from the infringing OSA product.  Slip op. at 6.  Innova argued that the ADSA was more than colorably different from the OSA because it conceded infringement for the OSA based on a feature removed from the ADSA.  The Federal Circuit rejected Innova's position, holding that "[e]ven if it were true that this particular feature was a basis for the prior finding of infringement—a fact that Proveris disputes—TiVo makes clear that the court must still determine whether that modification was significant."  Id. at 5-6 (footnote omitted) (citing TiVo, 646 F.3d at 882).  The Court concluded that the modification to the OSA was not significant, stating that it was not at all clear from the record whether the purported change actually had any effect.  "Thus, [the Court] agree[d] with the district court that the ADSA product [was] not more than colorably different from the infringing OSA product."  Id.  at 6.

The Court then turned to the second prong of the TiVo test—whether the newly accused product infringed the '400 patent, noting that this analysis required construction of disputed claim language.  The Federal Circuit held that the district court erred in declining to construe claim 3 in the contempt proceeding.  The Court noted that even though it had "previously held that in contempt proceedings, 'out of fairness, the district court is bound by any prior claim construction that it had performed in [this] case,' . . . here, there was no prior claim construction."  Id. at 7 (quoting TiVo, 646 F.3d at 883).  "Thus, it simply cannot be said that it was the 'law of the case' that the preamble was not a claim limitation."  Id.  (citing Bass Pro Trademarks, LLC v. Cabela's, Inc., 485 F.3d 1364, 1369 (Fed. Cir. 2007)).

Turning to construction of the disputed claim language, the Court held that the preamble of claim 3 was properly construed as importing a limitation into the claim.  The Court reasoned that "the preamble of claim 3 is the only reference in any independent claim to the inventive concept of capturing a sequence of images in order to characterize the time evolution of the spray plume," and that "[t]his fact alone is likely sufficient to support a conclusion that the preamble is limiting."  Id. at 9.  The Court further observed that its conclusion was further supported by the claim body itself, because the phrase "the image data" derived antecedent basis from the preamble, which further defined it.

With respect to the proper construction of the disputed language within the preamble, the Court held that it lacked sufficient information to make the determination.  The Court thus remanded the case for construction of the disputed claim language and for the district court to then re-evaluate whether the ADSA product in fact infringes claim 3 under the proper construction and therefore constitutes a violation of the injunction.

The Court then turned to the issues raised in Proveris's cross-appeal relating to sanctions, stating that it was premature to address them.  They noted, though, "in the interest of judicial efficiency, . . . that, should the district court again decline to award sanctions for Innova's overseas sales of certain component parts of the ADSA product or Innova's sale of the ADSA product to Westech Instrument Services Ltd., we discern no error in those rulings."  Id. at 12.  The Court thus vacated the district court's contempt order and sanctions award, and remanded for further proceedings.

Judges:  Lourie, Schall, Prost (author)

[Appealed from D. Mass., Judge Young]

This article previously appeared in Last Month at the Federal Circuit, February 2014.

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