The U.S. Court of Appeals for the Federal Circuit found that it was procedurally improper for a district court to rule as a matter of law that the moving party did not literally infringe where the non-moving party was neither fully heard on the non-infringement issue nor provided with a 10-day notice of the non-infringement ruling, and further declined to find this error harmless in view of an evidentiary dispute. Southwestern Bell Telephone Co. v. Collins, Case No. 07-1577 (Fed. Cir., May 27, 2008) (Moore, J.).
Southwestern Bell filed for declaratory judgment of non-infringement and invalidity of Collins' patents. In turn, Collins counterclaimed for infringement, damages and injunctive relief. The district court overwhelmingly ruled in Southwestern Bell's favor, finding invalidity for indefiniteness, improper re-examination, no literal infringement of a "control store" claim term, no literal infringement of "randomly receive" claim term and that evidence of equivalents was barred by prosecution history estoppel. At the end of a pre-trial hearing, the district court issued its claim construction on the "randomly receive" limitation and asked the parties what issues remained for the jury. Three days later, the district court again asked the parties what issues remained outstanding and requested that the parties submit briefing by the end of that same day on the effect of prosecution history estoppel. The following day, in a telephone conference, the district court granted Southwestern Bell's motion in limine on prosecution history estoppel and judgment as a matter of law (JMOL) that the "randomly receive" limitation was not literally met. Collins appealed.
The Federal Circuit dismissed several of Collins' arguments in a summary succession, affirming all but one of the district court rulings. The surviving argument concerned the procedure with which the district court found non-infringement as a matter of law of the claim term "randomly receive."
Collins argued that the district court improperly ruled on non-infringement. The Federal Circuit agreed, finding a JMOL was not proper under either Rule 50 or Rule 56. Under Rule 50, the Court found that JMOL was improper because "Rule 50 only applies when a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on the issue." The Court reasoned, "trial had not even begun in this case" and Collins was not given the opportunity to be fully heard on the issue. Further, the Court found a JMOL was improper under Rule 56, which requires district courts to give the non-moving party a 10-day notice, allowing the non-moving party to make "every factual and legal argument," unless the failure to give notice is harmless. The Court ruled that failure to give notice may be harmless if the non-moving party admittedly has "no additional evidence," or after consideration of additional evidence, a court finds "no genuine issue of material fact." The Court held that Collins was not given a 10-day notice and that failure to give notice was not harmless because there was a contextual dispute over a crucial piece of expert testimony. Thus, the Federal Circuit vacated the district court's JMOL for non-infringement and remanded the case for further proceedings.
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