____l_11111111l1__LE_

USFC2004-1609-01
{014E9B48-012D-4509-B12D-DEB3B56A088B} {61666}{05-050608:114502}{060305}

APPELLEE'S BRIEF

INEST/CRS
04-1609,05-1141,-1202

UNITED

STATES

COURT

OF APPEALS

FOR THE FEDERAL

CIRCUIT

GOLDEN

BLOUNT,

INC.,

Plaintiff-Appellee,
V.

FILED
U.S.COURTOF APPEALSFOR THE FEDERALCIRCUIT

JUN ROBERT H. PETERSON CO.,

.3 2005

JAN HORBALY GI,EI_K

Defendant-Appellant.

APPEALS

FROM

THE UNITED

STATES

DISTRICT

COURT

FOR

THE NORTHERN SENIOR JUDGE

DISTRICT OF TEXAS IN CASE NO. 3:01-CV-127, JERRY BUCHMEYER AND MAGISTRATE JUDGE PAUL D. STICKNEY

BRIEF OF PLAINTIFF-APPELLEE GOLDEN Charles W. Gaines BLOUNT, INC. William

SCHULTZ

D. Harris,
_

Jr.

Greg H. Parker Hirr GAINES, P.C. Palisades Central II 2435 N. Central Suite 1300 Richardson, (972) 480-8800 Expy. 75080

ASSOCIATES

5400 LBJ Freeway One Lincoln Centre Suite Dallas, 1200 Texas 75024

Texas

June 3,2005

04-1609,05-1141,-1202

UNITED

STATES COURT OF APPEALS FOR THE FEDERAL

CIRCUIT

GOLDEN

BLOUNT,

INC.,

Plaintiff-Appellee,
V,

ROBERT

H. PETERSON

CO.,

Defendant-Appellant.

APPEALS

FROM

THE UNITED

STATES

DISTRICT

COURT

FOR

THE NORTHERN SENIOR JUDGE

DISTRICT OF TEXAS IN CASE NO. 3:01-CV-127, JERRY BUCHMEYER AND MAGISTRATE JUDGE PAUL D. STICKNEY

BRIEF

OF PLAINTIFF-APPELLEE BLOUNT, INC. William D. Harris, Jr. SCHULTZ & ASSOCIATES 5400 LBJ Freeway One Lincoln Centre Suite 1200 Dallas, 75080 Texas 75024

GOLDEN Charles W. Gaines

Greg H. Parker HITT GAINES, P.C. Palisades Central II 2435 N. Central Suite 1300 Richardson, (972) 480-8800 Expy.

Texas

June 3,2005

CERTIFICATE

OF INTEREST the following: represented by the counsel is:

Counsel for Golden 1.

Blount,

Inc., certifies of every Inc.

The full name Golden Blount,

party of amicus .

The name party

of the real party in interest in the caption

represented

by this counsel,

if the

named

is not the real party in interest:

Not applicable

All parent percent counsel

companies

and any publicly

held companies

that own

10

or more of the stock of the party or amicus are:

represented

by this

Not applicable The name of all firms and the partners or associates that appeared for the party or amicus now represented by this counsel in the trial or agency or are expected to appear in this court are:

Charles

W. Gaines

William
SCHULTZ

D. Harris,

Jr.

Greg H. Parker HITT GAngES, P.C. Palisades Central II 2435 N. Central Suite 1300 Richardson, (972) 480-8800 Expy. 75080

& ASSOCIATES

5400 LBJ Freeway One Lincoln Centre Suite 1200 Dallas, Texas 75024

Texas

Roy W. Hardin LOCKE LIDDELL & SAPP, LLP 2200 Ross Avenue, Dallas, Texas Suite 2200 75201-6776

TABLE

OF CONTENTS

CERTIFICATE TABLE

OF INTEREST

........................ ....................................... CASES ...............................

.............

i iv .1 2 2 3 5 5 7 8 through 10 11 11 12 13 15 15 17

OF AUTHORITIES OF RELATED

STATEMENT JURISDICTIONAL STATEMENT STATEMENT STATEMENT A. 1. 2. 3. B.

STATEMENT OF ISSUES

.............

: ...................... FOR REVIEW .................

PRESENTED

OF THE CASE OF THE FACTS Pre-trial Background Peterson's Peterson's

...................................... ..................................... ....................................

Activities Following the Notice .............. Willful Disregard of the Patent ............... Device from Notice

Peterson's Sales of Its Infringing Trial ...........................................

The District Court's September 2, 2004, Findings ............. Literal Infringement-Direct ......................... 2. Peterson's Contributory and Induced Infringement ........ 3. Damages Assessed against Peterson ... ............ ... 4. The District Court's Findings of Peterson's Willfulness and Exceptional Case .................................
1, 5,

Proceedings

on Remand

.................

...........

SUMMARY STANDARD ARGUMENT A.

OF THE ARGUMENT OF REVIEW

................................. .................

.......................

21 23

................................................... The District 1. Court Had Jurisdiction To Change Its Judgment Findings .... Was The District Not Clearly Court Vacating Its June 22, 2004, Erroneous .............................

23 24

ii

2.

The August

18, 2004, Minute

Order

Was Not An Appealable 2, 2004, Findings 28

Judgment, And Adoption Of The September Was Not Clearly Erroneous .........................
B

The District Court's Findings Regarding Erroneous ............................................ 1. 2. 3. Peterson's Peterson's Peterson's Direct Induced Infringement Infringement Contributory Infringement

Infringement ...................... ................. .....................

Are Not Clearly 34 34 43 45 49 50 -.... " 52 58 60 .... 61 62

4. The Doctrine of Equivalents ........................ Peterson's Willful Infringement ........................... Damages ............................................. Exceptional Case ..................................

D. E. CONCLUSION CERTIFICATE CERTIFICATE

OF COMPLIANCE OFSERVICE

WITH

FED. R. CIV. P. 32(e)(7)(B)

......................................

b,

111

TABLE

OF AUTHORITIES

CASES Amstar Amsted 24 F.3d Anderson Corp. v. Envirotech Industries, Corp., 823 F.2d 1538 (Fed. Cir. Steel Casings Co., 1987) .........

PAGE 34

Inc. v. Buckeye

178 (Fed. Cir. 1994) v. City of Bessemer,

....................................... 470 U.S. 564 (1985) ............... Co., ......

23 30

Aro Manufacturing Co., Inc. v. Convertible Top Replacement 377 U.S. 476 (1964) .............................................. Beatrice Foods Co. v. New England Printing & Lithographic 899 F.2d 1171 (Fed. Cir. 1991) ..................................... Biovail 239 F.3d Brooktree 977 F.2d Corp. Int 'l v. Andrx Pharms., Inc.,

48 Co., 55

1297 (Fed. Cir. 2001)

..................................... Inc., ................ Inc., . ..........

22

Corp. v. Advanced Micro Devices, 1555 (Fed. Cir. 1992) .....................

58

Brown & Williamson Tobacco Corp. v. Philip Morris 229 F.3d 1120 (Fed. Cir. 2000) .......................... Continental Connector v. Houston Fearless, 350 F.2d 183 (9th Cir. 1965) ....................................... Datascope Corp. v. SMEC, Inc., 879 F.2d 820 (Fed.

21

29 Cir. 1989) ............ 34

Del Mar Avionics, Inc. v. Quinton Instrument Co., 836 F.2d 1320 (Fed. Cir. 1987) ..................................... Donald 1-I. Rumsfeld, Secretary 325 F.3d 1328 (Fed. Cir. 2003) of Defense v. Applied ..................................... Companies, Inc.,

57

24

iv

Dow

Chemical

Co. v. Mee Industries,

341 F.3d Corp.,

1370 (Fed.

Cir. 2003)

....

47, 48

Dynacore 363 F.3d

Holdings 1263 (Fed.

Corp. v. U.S. Philips Cir. 2004)

..................................... Inc.,

47

Electro Scientific Industries, Inc. v General Scanning, 247 F.3d 1341 (Fed. Cir. 2001) ..................................... Enzo Biochem, Inc. v. Calgene, States, Inc.,

44 .... 23, 58 32

188 F.3d 1362 (Fed. Cir. 1999) ..................

Fiataruolo

v. United

8 F.3d 930 (2nd Cir. 1993) Technical ......... Services,

Freudensprung

v. Offshore

Inc., et al., 32

379 F.3d 327 (5th Cir. 2004)

..............................

Fuji Photo Film Co., Ltd. v. Jazz Photo Corp., 394 F.3d 1368 (Fed. Cir. 2005) .................................. Gardner Golden 365 F.3d Hillgrave v. TECSystems, Blount, Inc., 725 F.2d H. Peterson 1338 (Fed. Co., Cir. 1984) ........

36, 48 : 23, 36

Inc. v. Robert

1054 (Fed. Cir. 2004) Corp. v. Symantec

........................... 265 F.3d 1336 (Fed. Cir. 2001)

1, 5, 15, 18, 21 ........ 45

Corp.,

lnstitut Pasteur v. Cambridge Biotech Corp., 186 F.3d 1356 (Fed. Cir. 1999) ..................................... Intel Corp. v. United States Int7 Trade Comm 'n, 946 F.2d 821 (Fed Cir.1991) ....................................... Kaufman Co. v. Lantech, Inc., 926 F.2d 1136 (Fed. Cir. 1991) .............

22

44 57

Kingvision Pay-Per- View Ltd. v. Lake Alice Bar, 168 F.3d 347 (9th Cir. 1999) ....................................... Knorr-Bremse Systeme Nutzfahrzeuge GMBH,

28

383 F.3d

1337 (Fed.

Cir. 2004)

............................ 718 F.2d 1056 (Fed. Cir. 1983)

49, 50, 52, 59 ......... 52 30 28 .......... 22

Lain, Inc. v. Johns-Manville Mathis v. Spears,

Corp.,

857 F.2d 749 (Fed. Cir. 1988)

........................ .................... Cir. 1993)

McDowell Miles Labs.,

v. Celebrezze,

310 F.2d 43 (5th Cir. 1962) Inc., 997 F.2d 870 (Fed.

Inc. v. Shandon, Research

Moleculon 793 F.2d

Corp. v. CBS, Inc., ..................................... 39

1261 (Fed. Cir. 1986)

Pandrol USA, LP v. Airboss Railway Products, Inc., 320 F.3d 1354 (Fed. Cir. 2003) ..................................... Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. Mich. 1978) ......................... Paper Converting Machine 745 F.2d 11 (Fed. Cir.1984) Preemption Devices, Co. v. Magna-Graphics ........................................ Mining Corp.,

32

52, 53, 55, 56

54 Co., 23, 36

Inc. v. Minnesota Cir. 1984) .......

& Manufacturing,

732 F.2d 904 (Fed.

.............................

Radio Steel & Mfg. Co. v. MTD Prods., Inc., 788 F.2d 1554 (Fed. Cir. 1986) ..................................... Riley v. Northwestern v. Kelsey Bell Telephone Co., 56 F.3d Co., 1 F.3d 725 (8th Cir. 1993) ................... Cir. 1996) ........ .......

52 26 55 30

Rite-Hite

1538 (Fed. Cir. 1995) 79 F.3d b_c.,

Roton Barrier, SlimfoId 932 F.2d

Inc. v. Stanley

Works, h_dus.,

1112 (Fed.

Mfg. Co. v. Kinkead 1453 (Fed.

Cir. 1991)

............................

.........

22

vi

State Indus., 948 F.2d U.S.v. U.S.v.

Inc. v. Mor-Flo

Indus.,

Inc., 36, 53 ................ _.. 30 36

1573 (Fed.Cir.1991) Natural 910 F.2d Devices 1380 (Fed.

...................................

ElPaso Papia,

Gas Co., 376 U.S. 651 (1964) 1357 (7th Cir. 1990)

.......................... Co., ........

Underwater 717 F.2d

Inc. v. Morrison-Knudsen Cir. 1983) .............................

23

Unisplay, S.A. v. American Elee. Sign Co., 69 F.3d 512 (Fed. Cir. 1995) ....................................... United United United United United States States States States States v. Certain v. Field, v. Jaeobs, v. United v. Yellow Land, 875 F.2d 178 F.Supp.2d 792 (E.D. Mich. 2001) .......

22 28 37 28 ........... 21 22

130 (7th Cir.1989)

..................... ....................

298 F.2d 469 (4th Cir. 1961) States Gypsum

Co., 333 U.S. 364 (1948) ....................

Cab Co.i 338 U.S. 338 (1949)

Vaughn v. Mobil Oil Exploration & Producing S.E., Inc., 891 F.2d 1195 (5th Cir. 1990) .......................................

32

STATUTES 35 U.S.C. 35 U.S.C. 284 285 .............................................. ...........................................

, .

PAGE 15,22 15, 22, 58

"o . o t5

Fed. R. Civ. P. 50

vii

Fed. R. Civ. P. 59 ......................................... Fed. R. Civ. P. 52 ................................. Fed. R. Civ. P. 58 ................................................ Fed. R. Civ. P. 60 ........................................ Fed. R. Evid. 103 ................................................

15, 17, 25 15, 21, 25, 28, 29, 34 31 4, 27, 28, 33 37

Vlll

STATEMENT This Federal Defendant, "Peterson") (hereinafter case was formerly on appeal before

OF RELATED the United

CASES States Court entry of Appeals of judgment referred Blount, for the against to as Inc.,

Circuit

from

the District

Court's

here the Appellant, and in favor

Robert

H. Peterson, here

Co., (hereinafter Golden

of Plaintiff,

the Appellee, 9, 2002. Court's

referred

to as "Blount")

on August the District

On April 19, 2004, this Court judgment and remanded the to

affirmed-in-part case for entry infringement, the doctrine

and vacated-in-part of specific contributory findings

of fact and conclusions induced infringement, Court affirmed

of law with respect and infringement Court's

infringement, This

under claim in also "the before The

of equivalents. regarding the "raised

the District

construction claim affirmed Patent")

level" language from"

of claim 1, the "below" of claim 17.

language

17, and the "directed the District

away

language

This Court (hereinafter

Court' s finding (JT--2435-37,

that U.S. Patent No. 5,988,159 2440).

was not invalid.

The prior appeal was presented and Judge Richard H. Peterson I.

Chief Judge Haldane decision was published

Mayer,_ Judge Pauline as Golden Blount,

Newman,

Linn.

Inc. v. Robert referred

Co., 365 F.3d

1054 (Fed.

Cir. 2004),

and is hereinafter

to as Blount

1Peterson's Newman when

brief is incorrect in fact, the Chief

in that it states that the Chief Judge Judge was Haldane Mayer.

was Pauline

JURISDICTIONAL Peterson's assertions, Jurisdiction Statement

STATEMENT is correct, however, contrary to Peterson's

there was only one final judgment on December 15, 2004.

entered by the District

Court, which was

the one entered

STATEMENT Blount manner, believes

OF ISSUES

PRESENTED

FOR REVIEW 12 in a self-serving belong

that Peterson

has phrased

issues 1 through

and they contain section

argumentative of its brief.

assertions, therefore,

which more appropriately presents

in the argument believes 1.

Blount,

the Court with what it

to be more pertinent Whether

statements

of the issues. to change its judgment after

the District

Court had jurisdiction

June 22, 2004. 2. was clearly 3. of direct contributory 4. that Peterson Whether erroneous. Whether infringement and induced Whether willfully the District Court'sjudgrnent of Peterson is clearly erroneous and others and in its findings its findings of the District Court's reversal of its judgment in view of a mistake

on the part infringement

on the part of Peterson judgment is clearly

of the Patent. in its finding

the District infringed

Court's

erroneous

the Patent. 2

5.

Whether the District Court's judgment is clearly erroneous in the amount

of damages awarded to Blount. 6. Whether the District Court abused its discretion in the theory it used to

determine the amount of damages awarded to Blount. 7. Whether the District Court's judgment is clearly erroneous in its finding

that the case against Peterson was exceptional. 8. Whether the District Court abused its discretion in trebling damages

against Peterson. 9. Whether the District Court abused its discretion in awarding Blount its

attorneys' fees.

STATEMENT Blount paragraphs superfluous

OF THE CASE Statement of the Case because certain are

does not agree with Peterson's contain clerical errors

and misleading this Court. response

statements

of fact and others

to the real issues before

Due to a lack of a substantive Blount filed suit for infringement Beginning Buchrneyer

from Peterson,

on January

18, 2001, 1518-19).

of the Patent by Peterson. Court conducted 21A days, 3

(JT--0109-123,

on July 29, 2002, the District presiding. The trial

a bench trial with Judge Jerry which time each party

lasted

during

introduced numerous exhibits and Judge Buchmeyer observed not only the demeanor
of the witnesses, (JT--0965-78). but also Peterson's infringing devices in comparison to the claims. ofBlount's

He also came down from the bench to view the orientation "4A") and Peterson's own infringing structure

exhibit 4A (hereinafter

that it introduced were

at trial as exhibit D31 and exhibit D32 (hereinafter an assembly assembly of Peterson's ember burner (EMB)

D31 and D32), both of which attached to a standard

G-4 burner

(hereinafter

"G-4").

2 (JT--1170-76). Court entered a final judgment infringer in favor of Blount The

On August and found

9, 2002, the District to be a willful

Peterson

and the case to be exceptional. and reasonable attorneys' on March attorneys'

District Court also awarded -0518, 0519-27).

Blount treble damages Court amended amounts

fees. (JT7, 2003, fees and

The District

its Final Judgment for the damages, been awarded

to include interest

the appropriate (JT--0531), which

calculated had

previously

to Blount. 3 Peterson

-'The District

Court's

Finding

of Fact Number

42 contains

a clerical mistake

in

that it references 4A instead of Peterson's D31 and D32, as contained in the record and which is correctly cited in the Findings. Even though this is, at most, harmless error, clerical Blount has asked this Court for leave to have the District under Fed. R. Civ. P. 60. This clerical Court correct this mistake error was found by Blount's

counsel in reviewing citations to the record made in Peterson's Principal Brief. The reason that Peterson has not brought this oversight to the Court's attention is unexplained. 3peterson's citation brief references "(JT--0014)," which is a mistake. The correct

is (JT--0531). 4

appealed, and on April 19, 2004, this Court, issued its decision
44). On June proposed "Findings" hearing, of Blount. 0050-82, 10, 2004, both parties, and at the direction of Law briefing

in BlountL

(Y1"--2428-

of the District (hereinafter

Court, referred

filed to as

Findings

of Fact

Conclusions extensive

in all instances). the District

After

by both parties

and an oral in favor 0048,

Court entered 3183,

its Final Judgment 2511-12,

on December

15, 2004,

(JT--2510-12, 3065-103,

3316, 2513-14,

3183, 2885-2918,

0083-94,

3316, 3317-67).

The details of the remand

proceedings

are set forth below.

STATEMENT Blount omits A.

OF THE

FACTS of the Facts in that Peterson

does not agree with Peterson's key facts.

Statement

and misstates Pre-trial Blount's

Background Patent issued on November 23, 1999, with 19 claims, including two

independent selling embers fireplace.

claims 1 and 17. Approximately embodiment covered

six years prior to that time, Blountbegan by the Patent, resemble which provides glowing burning

a commercial

in front of artificial 0%-1089-90,

logs to more closely 0993). 5

an actual wood

Between the years of 1993 and 1996, Blount sold many of its Controlled Ember Bed Burners (hereinafter "Blount's ember burner") and associated artificial logs and grate sets through distributors and retailers. In late 1996, Peterson began

manufacturing, advertising, and selling an EMB that was to be connected to its G-4 or G-5 burner assembly (hereinafter "G-5"), and when connected so, was strikingly

similar t0, if not virtually a copy of, a commercial embodiment of Blount's patented device, as illustrated below. (JT--0055, 1316-18). During pre-trial, Peterson stipulated that its device includes a primary burner pipe, an ember burner pan that supports the primary burner pipe, an EMB located in front of the ember burner pan, and a valve that controls a flow of gas between the primary burner pipe and the EMB. (JT--0364).

12_

T04 D

Embodiment

of Patented

Device

Peterson's

Accused

Infringing

Device (JT--2314).

FIG. 2 of the Patent

(JT--0115).

EMB Installation

Instructions

1.

Peterson's

Activities

Following

the Notice

When Blount learned of Peterson's its infringing president, Corrin activities on December

device, it notified Peterson of the Patent and letter sent to Peterson's 17, 1999, Tod letter to stating Blount's

16, 1999, by a notice (JT--1513).

Leslie B ortz (hereinafter

"Bortz").

On December forwarded

(hereinafter"Corrin"), counsel,

Peterson's

vice president,

the notice

their patent "[e]nclosed Attorney." knew

Mr. William

McLaughlin letter

(hereinafter we received letter plainly

"McLaughlin"), from Golden

is a patent (JT--2264,

infringement added).

emphasis

Coffin's

indicates

that Peterson

that the notice

letter accused

them of infringement. Peterson sent him

Soon after forwarding only a brochure infringing accused concerning

the initial notice letter to McLaughlin, the accused 2316, infringing 1148-56).

device and a picture McLaughlin

of the accused

device. infringing before

(JT--2312-15, device him.

did not see an actual history of

and had no other documents 1107-08).

or the prosecution a telephone "something 1008-10).

the Patent

(JT--1113-14, that Peterson

During

conversation, similar" to the

Bortz told McLaughlin patented invention

had been practicing (JT-- 1928-30,

for about 20 to 30 years. at that time was: argument, 1929).

McLaughlin's

sole conclusory years,

comment

"if you have been doing this for 20 or 30 or words to that effect, of invalidity or

that would

be a strong

infringement."

(JY-- 1129-30,

However, 7

Bortz didn't

recognize

what "this"

was, because during trial he admitted that the products Peterson was making 20 to 30 years ago were not the same as its EMB. (JT--1221). In accordance with McLaughlin's suggestion, Petersonon December 30, 1999,

responded to the notice letter asking for additional time in which to respond. (JT-1514). Peterson never contacted Blount as requested in the original notice letter. All the while, Peterson continued its infringing activities. After receiving no response for more than four months, Blount sent a second patent infringement notice letter to Peterson on May 3, 2000. (JT--2267). Even McLaughlin admitted during trial that this second letter informed Peterson of infringement. (JT-- 1109-10).

Peterson responded to the May 3, 2000, letter with a letter dated May 16, 2000, asking Blount to explain to Peterson, in detail, the basis upon which Blount believed that Peterson was infringing the patent. (JT-- 1517, 2268). Petersonstill made no effort to ceaseits infringing activities, nor had Peterson sought or obtained any competent legal advice concerning infringement or validity or made any other attempt to

understand the Patent better until after the lawsuit was filed. 2. Peterson's Willful Disregard of the Patent

On January 18,2001, over a year after Peterson received its first notice letter, Blount filed suit. (JT--0109-23). Blount sent a final letter to Peterson advising it that 8

suit was brought in view of its failure to respond or indicate in any manner its intentions with respect to the infringing product. (JT--2269-70). Peterson still made

no effort to ceaseits infringing activities in the time period between the May 3, 2000, letter and the January 19, 2001, letter, or for that matter, until after the conclusion of trial. (JT--0798-802). It was not until February 2001, after the suit was brought and some 14 months after receiving the initial notice letter, that Peterson expressed serious concerns about its infringing activities. At this point, Peterson finally became concerned, not with the damages associated with infringement, but with the attorneys' fees that it might be required to pay as a willful infringer. (JT-- 1205-07, 1933-34). Bortz told McLaughlin that he didn't think this was a very meaningfulcase in terms of the "dollars at stake" but that he heard a person might have to pay attorneys' fees if he loses a patent lawsuit. (JT-- 1205-07, 1893-94, 1933-34). Bortz asked McLaughlin what he Should

do. McLaughlin answered that obtaining an opinion could avoid attorneys' fees. (JT-1933-34). The possibility of losing the suit did not concern Bortz, because of the very minor amount of money involved. The violation ofBlount's property rights were of

no concern either; the only issue in Bortz' mind was Blount's attorneys' fees. (JT-1205-07, 1893-94, 1933-34). The District Court found that these facts showed a willful disregard for the Patent. (JT--0073, Findings 109-111). 9

After being sued, Peterson finally

prosecution attorneys' 1112-14, history of the Patent

authorized McLaughlin
to protect

to order

the

in an attempt

itself from having

to pay

fees. (JT-- 1107-08). 1156-58), and didn't

McLaughlin provide

never gave a written opinion, until sometime

(JT-- 1105,

his oral opinion

in May 2001, had

at least five months after suit had been brought not seen the actual Peterson entered 3. After season, infringing device

(.IT-- 1111-14).

Still, McLaughlin

for his inspection activities

and analysis.

(JT--1114). Court

made no effort to cease its infringing

J

until after the District

a permanent Peterson's Peterson

injunction.

(JT--0798-802). Device its infringing Peterson from Notice through Trial

Sales of Its Infringing began manufacturing

device

in the 1996/1997 to be sold with 1323-24, on August 1598-1601), (JT--1787-88).

it sold both the G-4 and G-5, both of which to its EMB, which December Peterson

intended

and connected 1341-42).

also sold. (JT--0364, Court's

1211-12, judgment

Between

16, 1999, and the District

9, 2002, Petersons01d at least ten of which Peterson

3,723 EMB units in the United were G-5s pre-assembled

States, (JT--0802, with an EMB.

Additionally, for the purpose

fully demonstrated

its EMB attached

to a G-4 to its distributors Peterson testified and

of illustrating

how the EMB works. customers

(JT-- 1210-11).

that it makes the EMB because

asked for such an effect, consumers

(JT--1320),

it sold both the G-4 and G-5 and EMBs to ultimate 10

with one of a number

of types of its artificial

logs and a log grate. (JT--1322-24).

B.

The District 1. Literal

Court's

September

2, 2004,

Findings

Infringement-Direct with this Court's mandate, the District Court issued no over 25 pages, and 45 conclusions citations to the record. (JT--0050-82). of law 4 as

In an attempt to comply less than discussed 119 findings over 8 pages,

of fact discussed with numerous

In reaching affirmed exterisive

its decisions,

the District

Court relied on the claim construction between device the parties, contained its personal identical 0057-65). Blount's

by this Court, (JT--2428-44), and unrebutted testimony

on a stipulation that Peterson's 0363-65, which

each

of the

elements in the claims at issue, (JT--0011, of 4A and Peterson's Peterson's parties contained had exhibits D31 and D32,

0978-93),

observations to 4A, and Since the

is substantially 1149, 1173-74, when connected

D30 and D34. (JT--0974-76, that Peterson's device,

stipulated

to a G-4 or G-5, truly

all of the other elements

recited

in claims

1 and 17, the onlyelements

at issue during away element

trial were the raised level element of claim 17. (JT--0364). Peterson

of claims

1 and 17 and the directed rebut Mr. Blount's

did not specifically

4In view of such detailed

Findings,

Blount

finds

Peterson's

charge

that the

District Court failed to follow this Court' s mandate 11

on Remand

to be totally incredible.

element-by-element and claim-by-claim testimony, but instead, based its case-in-chief, primarily on invalidity of the Patent and the bottoms test claim construction, both of which were rejected by this Court. (JT--0329-44, 0427-45).
The District whether Court found that since both the EMB were and provided D34, and the burner customer to conclude assembly, along that with the

it be a G-4 or G-5, contained

to the ultimate it was reasonable to assemble

instructions instructions configuration. 2.

in D30

were used by those customers (JT--0063, Peterson's Court Finding Contributory found 50).

the device

in an infringing

and Induced device

Infringement was not a staple article of

The District commerce

that Peterson's Bortz'

based on, among of commerce

other evidence, and that it didn't

testimony

that the EMB was not used as tO

a staple article

have any use apart from being

an EMB, (JT-- 1211 - 13, 1669), on Con-in' s testimony be used with the G-4 and could Blount's testimony that he didn't Court found

that the EMB was intended

also be used with the G-5, (JT--1323-24), know of any other use for the EMB. that Peterson Peterson also induced others

and on

(JT--1001). the

The District Patent, (JT--0066-67), 16, 1999, provided followed,

to infringe

because D30

had knowledge

oft_he Patent as of December which would, when that its

and D34

to its ultimate

customers,

lead to an infringing

configuration, 12

and knew or should have known

actions would cause others to infringe. (JT--0067). The District Court also noted that Peterson's full demonstration of the device to its distributors was also inducement because this information customers. (JT-- 1334-35). 3. Damages Assessed against Peterson
factors to determine Blount damages and found evidence of infringing found that of

was ultimately

passed on to dealers, assemblers, and

The District Court used the Panduit

that Blount demand substitutes Blount established all of them. device.

(JT--0068-69).

presented

for the patented

(JT--0994-95, (JT--0996-99), capacity

0969-70).

The absence

was also established,

and the District the demand.

Court

had the manufacturing For purposes

to handle

(JT--0069,

0996-99). that a two-

of determining between

damages, Blount Finding

the District

Court found

supplier device. Peterson Peterson

market

existed

and Peterson

with respect

to the patented Blount and

(JT--0069-70, controlled offered Similar

0996-0998, about

88). Mr. Blounttestifiedthat burner market.

95 percent

of the ember

(JT--0996-98).

no evidence to Blount,

to rebut this. and in addition to its G-4 and EMB, Peterson During also trial

manufactures Blount

and sells artificial evidence having

gas logs. (JT--0960-61, Mr. Charlie

2295-2300).

presented

through

Hanft (hereinafter"Hanft"), with gas fireplaces.

a thirdIn past

party witness

retailer

extensive

sales experience 13

years, Hanft primarily

sold Peterson's products, but since 1994 he primarily

sold

Blount's products. Hanft testified that 97 percent of the time that he sells one of Blount' sember burners, he also sells an entire burner assembly and log setwith it. (JT-1084-89, 1093-94). Blount also established its profits for its logs and its ember burner (e.g., sales cost less manufacturing costs). Blount further provided a damage summary sheet illustrating the amount of damages, obtained by multiplying Peterson's salesby Blount's profits. (JT--1597, 1602). Mr. Blount, who oversaw the accounting for these amounts, testified that the manufacturing costs included materials, direct labor costs, indirect labor costs, andutilities. (JT--0071, 1072-73). The District Court specifically found that Peterson failed to rebut Blount's damages evidence because Peterson did not offer any specific numerical evidence or document to quantify, even in a general way, when the EMB and logs would not be sold together.(JT--007t, Findings 97-100). In calculating the damages awarded to Blount, the District Court found that the infringement damages included profits that Blount lost regarding the sale of both the EMB and the log sets and grate, under claim 155of the Patent, or under an alternate

5Claim 15 reads: "The gas-fired artificial logs and coals-burner assembly according to claim 1wherein the open frame pan and primary elongated burner tube is positioned under an artificial logs and grate support means."

14

theory of the entire market value rule, (JT--0070-71,0121), and calculated

based on the evidence 4. The presented by Blount. (JT--0071, of Findings

the amounts

101-103). Willfulness and

District

Court's Case

Findings

Peterson's

Exceptional As discussed above,

after it first received was filed,

notice

on December never obtained

16, 1999, and a competent 1929). fees. to

prior tO the time that the lawsuit opinion from its patent Peterson's 1933-34, counsel

Peterson

McLaughlin.

(JT--l105-09,

1129-30, but attorneys' Peterson's Findings

Furthermore, (JT-- 1205-07, constitute Accordingly,

main concern 1893-94).

was not its infringement, Court found

The District

actions 109-118).

a willful

disregard

for the Patent.

(JT--0073-74,

the District

Court trebled

the damages

under 35 U.S.C. Blount

284, found the fees.

case to be exceptional (JT--0074). 5.

under 35 U.S.C.

285, and awarded

its attorneys'

Proceedings

on Remand ruling Court, adopted in Blount notably I, on June without Findings Blount 10, 2004, both parties, motion, filed proposed by for

In response at the direction Findings. mistake.

to this Court's of the District Court

and

The District (JT--2510,

Peterson's

on June 22, 2004, filed a request

3183).

On July 6, 2004,

timely

reconsideration

and a motion

for a new trial under Fed. R. Cir. P. 50 and 59, and a

15

motion to amend findings of fact and conclusions of law underFed. R. Civ. P. 52(b). (JT--2511, 2513). Again, Blount's
District Court until December After mistake extensive briefing Peterson's motion for a new trial remained pending with the

15, 2004. and oral arguments, Findings. the District Court realized its

in adopting

At the conclusion Peterson' and necessary s Findings

of the August and instructed

18, 2004, Blount Blount the

oral hearing, to present

it vacated

the order adopting findings

it with the necessary 31,2004.

final judgment,which to Peterson's

did on August

(JT--3183,

2885-2918).

Contrary

argument,

District Court never mentioned Court's arguments submitted application applications remand order, Blount

the June 10, 2004, Findings. included in those

To fully comply with this Findings, facts or the

proposed The District 0050-82).

that arose during Findings

the remand

proceedings.

Court adopted Blount

on September

2, 2004. (JT--0048,

also filed its and its 16, 2004,

for Attorneys'

Fees on September

8, 2004,

(JT--2919-3059), On September

for Costs on September

9, 2004. (JT--3060-62). referred

Judge Buchmeyer Judge Stickney Notably,

by Order of Reference, for determination. Peterson

both of these matters

to Magistrate

(JT--3064). 52(b) motion to challenge the District

did not file a Rule

16

Court's September 2, 2004, Order, even though it had every opportunity to do

Instead, September Magistrate awarded December December dismissal -3316). Peterson forwent this procedural avenue and filed a Notice Order. of Appeal

SO. 6

on

17, 2004,

based

on the August

18, 2004,

(JT--3065-103). fees and costs to be on on the

Judge Stickney to Blount, after

determined which

the amount

of attorneys'

Peterson

filed its second

Notice

of Appeal

9, 2004. (JT--3263-3315). 15, 2004, of remaining Peterson (JT--0083-94), pending

The District

Court entered its Final Judgment document, also entered

and in a separate including Blount's

motions,

motion for a new trial. (JT14, 2005. appeals (JT-

filed its third Notice of Appealin consolidated

this case on January Peterson's various

-3317-67). present

This Court ultimately on February

into the

appeal

15, 2005.

SUMMARY

OF THE

ARGUMENT in any way it deemed After (JT--

The District Court had jurisdiction appropriate the District during the remand Court adopted proceedings

to change its judgement because

it never lost its jurisdiction. on June 22, 2004,

Peterson's

Findings

by mistake

6Since September now complain

Peterson about

had

an opportunity

under

Rule

52(b)

to challenge

the

2, 2004, Order, but choose this on appeal.

not to do so, Peterson

has waived

any right to

17

2510, 3183), Blount timely filed a motion for a new trial under Fed. R. Civ. P. 5 9. (JT-2511,2515-53). Immediately after the District Court's June 22, 2004, Order, Blount

knew that the District

Court had inadvertently

made a mistake.

Thus, Blountrequested that fully challenged out numerous the

a new trial and prepared District Court's

its Rule 50, 59 and 52(b) motions

June 22, 2004, Order in all respects

bypointing

factual As such,

and legal errors that went to the very heart of the judgment. Blount's District motion met the requirements of Rule 52(b). motion

(JT--2515-53).

It is significant

to note that the

Court never disposed pending

of Blount's

for a new trial at the oral hearing, of all remaining remained motions on

which remained December

until the District

Court disposed

15, 2004. (JT--3316).

The District Court's jurisdiction to alter its judgment Order.

intact after 2,

June 22, 2004, and it had the power 2004, to correct its mistaken

sua sponte

on September

June 22, 2004,

The DisWict Court's has furiously correcting attacked

judgment

is not clearly erroneous to vilify the District

in any respect. Court

Peterson and

and attempted As much

for admitting

its mistake. because

as Peterson

would

like it to be, this is not clear error. that a mistake had been made, its mistake. in Blount it

To the contrary, would have

the District error

Court admitted

been

clear

for the District correction

Court

not to correct

Moreover,

the District Court's to Peterson's

is consistent

with its first judgment indicator

I, and contrary

arguments,

is an unmistakable 18

that the District

Court was very much involved at all levels within the judicial and judges orders. writing thousands

in the case. process.

Though

unfortunate, process involves

mistakes

do occur clerks and

The judicial

attorneys, of documents

of words and judges

signing hundreds

It isperfectlyplausible

that a district courtjudge, briefs,

afterhavingrigorouslyread handed the wrong

and considered document

a set of opposing

can be inadvertently

days or weeks

later by a clerk or an assistant Court's September

for signature. they are not

With respect clearly erroneous.

to the District The District

2, 2004, Findings,

Court did not abuse its discretion or awarded Blount

in the way in which fees. All of the Court's

it determined District Findings

and trebled findings

damages

its attorneys'

Court's

are fully supported evidence, evidence

by the record. as discussed

The District

are based

on substantial

herein. Court found that there in Blount 1. Peterson's

In view of the substantive was infringement action in assembling

before it, the District affirmed

based on the claim construction an operative device

for purposes

of showing

it to its distributors of its Court

and assembling instructions

at least ten G-5s with its EMB, how to assemble

along with the dissemination lead the District

illustrating

a G-4 with an EMB, by both Peterson

to find that there was direct infringement and that there District Court's was both contributory decisions on

and its ultimate

customers The and

and induced are

infringement supported by

by Peterson. both direct

infringement 19

circumstantial evidence as contained in the record and cited in its Findings.

The

simple fact that Peterson has pointed to evidence that may favor its position is not sufficient to overcome the clearly erroneous standard as established by this Court's legal precedence. The District Court's Findings that Blount is entitled to receive actual damages is not clearly erroneous. The damages awarded to Blount are supported by the

record, whether using claim 15 of the Patent, which includes the logs and grate, orby the established law of "the entire market value rule" or "convoy." The District Court

did not abuse its discretion in choosing either of these theories in calculating the damages. The actions of Peterson were willful, as found by the District Court. The record establishes that Blount's property rights were not of concern to Peterson due to the small amount of money that Peterson perceived to be at issue, and the minimal efforts that it exerted in investigating Blount' s infringement charge. (JT--0072-74, Findings 104-119). Peterson's real concern was, instead, the attorneys' fees it would have to payifit lost the lawsuit. In Peterson's mind, absent the attorneys' fees, any damages

would be inconsequential, so it could infringe the Patent without fear of significant, financial retribution. When Peterson learned of the possibility of paying attorneys'

fees, it became concerned, and it sought a way to avoid those fees. To that end, 20

Peterson, after the lawsuit was filed, finally became sincere about seeking legal advice.
In view of such a plain, willful disregard Court did not clearly err in finding Peterson abuse its discretion fees. in trebling the damages of the property rights of Blount, the District it did not

to be a willful infringer. award and awarding

Further,

Blount its attorneys'

STANDARD Peterson Blount incorrectly and incompletely

OF REVIEW states the standard of review. Therefore,

is obligated

to offer its own. this Court reviews findings Morris of fact. the F.

The present appeal is from a bench trial. Accordingly, District Court's decision Brown

for errors of law and clearly erroneous & Williamson Tobacco Corp. v. Philip

R. Civ. P. 52(a); F.3d 1120,

Inc., 229

1123 (Fed. Cir. 2000). conclusions

On appeal from a bench trial, this Court reviews of fact for clear error. 2004);

the district court's Golden Blount, Brown at 1123.

of law de novo and findings H. Peterson is clearly

Inc. v. Robert A finding

Co., 365 F.3d 1054, 1058 (Fed.Cir. erroneous when, despite some

supporting

evidence, conviction Gypsum

the reviewing

court on the entire evidence has been committed.

is left with the definite and firm United States v. United States

that a mistake

Co., 333 U.S. 364, 395 (1948).

This standard 21

does not entitle a reviewing

court to reverse the finding of the trier of fact simply because

would account have decided the case differently. In other words,

it is convinced if the District

that it Court's or

of the evidence

is plausible

in light of the record

viewed

in its entirety,

where there are two permissible erroneous. United

views of the evidence,

the fact finder cannot be clearly (1949); Miles Labs.,

States v. Yellow lnc.,

Cab Co., 338 U.S. 338,342

Inc. v. Shandon, The District Patent.

997 F.2d 870, 874 (Fed. Cir. 1993). and its ultimate whether under literal customer infringed the of

Court found that Peterson of infringement, of fact reviewed Pharms.,

A determination is a question

or under the doctrine erroneous standard.

equivalents, Biovail

the clearly 1297,

Corp. [nt'l v. Andrx The District

Inc., 239 F.3d

1300 (Fed. Cir. 2001). infringer and that the

Court also found that Peterson It awarded treble damages

was a willful and attorneys' damages,

case was exceptional. {}284 and 35 U.S.C. standard standard Pasteur Unisplay, The District erroneous

fees under 35 U.S.C. the clearly erroneous

{}285. When this Court reviews of the amount of the theory Corp.,

applies to the review applies to the review Biotech

o fdamages, chosen

while the abuse of discretion to compute damages, lnstitut See,

v. Cambridge S.A.v.

186 F.3d

1356,

1369 (Fed. Cir. 1999);

American finding

Elec. Sign Co.,

69 F.3d

512, 517 n.8 (Fed.

Cir. 1995).

Court's standard.

of willful infringement

is one of fact, subject to the clearly hw., 932 F.2d 1453, 1459

SlimfoldMfg.

Co. v. Kinkead[ndus., 22

(Fed. Cir. 1991). The finding that the case was exceptional is also one of fact and is reviewed based on clear error. Enzo Biochem,
(Fed. Cir. 1999). is reviewed reviews Inc. v. Calgene, Inc., 188 F.3d 1362, 1370 fees also

If the case is found to be exceptional, for abuse of discretion.

any award Id. at 1370. Trebling

of attorneys' This Court

by this Court

any trebling

of damages

for abuse of discretion.

of damages

is within

the discretion

of the district court and should notbe AmstedIndustries, 1994), rev'd

overturned

absent a clear showing Co., 24 F.3d Inc. v.

of abuse of discretion. 178, 183 (Fed. Morrison-Knudsen Where observe Cir.

Inc. v. Buckeye grounds;

Steel Casings Underwater

on other

Devices

Co., 717 F.2d

1380 (Fed. Cir. 1983). are involved, it is especially important of the evidence Inc., 725 F.2d Mining & to

credibility

determinations

the rule of clear error. Determining province (Fed. Cir. of the trier of fact. 1984); Preemption

the weight and credibility Gardner Devices, v. TEC Systems, Inc.

is the special 1338, 1349

v. Minnesota

Manufacturing,

Co., 732 F.2d 904, 905 (Fed.

Cir. 1984).

ARGUMENT The District Peterson Court Had Jurisdiction To Change Its Judgment over this case on no less

Ao

argues that the District

Court lost jurisdiction 23

than two different occasions during the remand proceedings, once after June 2 2, 2004, and once after August 18, 2004. At all timesduring
District Blount. record Court retained Peterson's reveals jurisdiction due to pending the remand motions proceedings, the

that were timely review

filed by of the or

arguments

are inept, since even the most cursory position is not supported

that Peterson's

by the facts, the Rules,

case law. 1. The District Clearly As discussed Court Vacating Its June 22, 2004, Findings Was Not

Erroneous above, the District 3183). Court mistakenly Peterson questions adopted Peterson's Court's argues Findings integrity that if the

on June 22, 2004. (JT--2510, and involvement District something above, Court?s

the District Peterson document,

in the case because mistake was simply

of this mistake. signing the wrong

it was signing As discussed

it had not read.

This is a huge

leap on Peterson's documents

part.

the judge

could have simply Yet, Peterson Mistakes

signed the wrong uses mere conjecture are an unfortunate

even after having the District process Court and at

thoroughly for correcting though

read them.

to malign

its mistake.

part of the judicial

totally undesirable,

they do occur at the district at the appellate Companies,

court level, most certainly See, DonaldH. 1328, Rumsfeld,

the counsel Secretary

level, and occasionally, of Defense v. Applied

level.

Inc., 325 F.3d

1330 (Fed.

Cir.

24

2003).

There is nothing in the District

Court's correction that would warrant

overturning thejudgrnent, as Peterson urges. Moreover, there is nothing in the record that even remotely suggests that the District Court was not fully involved in the

process or that it didn't read or fully consider the findings that it ultimately adopted on September 2, 2004, clerical mistakes, notwithstanding. It was apparent early on that the District Court inadvertently signed the wrong papers, because it was completely antithetic to the District Court's Findings of August
9, 2002, (JT--0518-26), justification 6, 2004, motions continued December in the record which were totally in Blount' for such an extreme reversal. s favor. Moreov, er, there was no Blount, on July filed its

Accordingly, Court's

and within under

ten days of entry of the District

June 22, 2004,

Fed. R. Civ. P. 52(b) and 59. Court

At the very least, the Rule 59 motion until its Final Judgment on

to vest the District 15, 2004. attacks Rule

with jurisdiction

Peterson ignores Peterson Blount's

the sufficiency 59 motion

of Blount's

52(b) motion,

but conspicuously reason, because

for a new trial, and with good remained Magistrate pending

well knows

that the Rule 59 motion 15, 2004. (JT--3316).

before

the District specifically fees.

Court until December

Judge Stickney Blount

noted this in his order dated November (JT--0083-93). Moreover, the District

15, 2004, awarding Court's 25 August

its attorneys'

18, 2004, bench order did not

specifically dispose of this motion, despite what Peterson argues. The presence of Blount's Rule 59 motion alone defeats Peterson's argument, and unequivocally establishes that the District Court did have jurisdiction September 2, 2004. Even ifBlount's Rule 59 motion had not been present, Blount's 52(b) motion to change its judgment on

was more than adequate to challenge the District Court's June 22, 2004, Findings. Blount's 52(b) motion was 38 pages in length and included an Appendix that

specifically addressed errors of fact in some 133 of the District Court's more crucial findings that went right to the heart of the issues athand, including the fmdings related to infringement, willfulness, and damages. (JT--2515-53). Peterson challenges the sufficiency of Blount's 52(b) motion because Blount allegedly did not request As such, Peterson argument goes, the District Peterson's argument is not

amendment of all of the Findings.

Court erred in vacating the June 22, 2004, Findings. supported by the facts or the law.

The case on which Peterson relies is not on point. In Riley v. Northwestern

Bell Telephone that simply hearing contained Co., 1 F.3d 725,726 that the movant (8th Cir. 1993), the movant intended to move filed a bare motion at an oral Its motion from that in

stated

the court to amend at that time. different

that it had requested nothing else.

and would present fact situation 26

its argument is strikingly

The present

Riley.

In the present

case, Blount

had filed a detailed

motion

pointing

out numerous As seen from

examples

of errors in factual and reviewing

findings,

as noted above. (JT--2515-53). itself, there was nothing and detailed.

this citation Blount's

the document

conclusory Rule

about 52(b) motion

Rule 52(b) motion. the movant

It was thorough to challenge the District manifest

Moreover,

does not require generally

each and every finding.

Blount's

did this by requesting contained

Court to vacate its June 22, 2004, Findings errors of law and fact, and then went For Peterson to challenge on to

in toto becausethey

point out many examples ofBlount's Court. As ifBlount's retained jurisdiction

of those errors. wasteful

the sufficiency

52(lo) motion is, frankly,

and obfuscates

the real issues before this

Rule 50, 59 and 52(b) motions to change its judgment

weren't

enough,

the District P. 60(b)(6),

Court which

under Fed. R. Cir.

states that the court may relieve judgment Although for....any

a party or a party's

legal representative

from a final

other reason justifying

relief from the operation of granting relief"on

of the judgmenU motion," the rule

the language

of Rule 60(b) speaks the motion

does not say whether on its own motion.

must be made by a party or whether

the court can act may be

While

Rule 60(a) says that relief

under that subsection

Thus,

7It should be noted that at this time neither party had filed a notice of appeal. there was nothing to otherwise diminish the District Court's jurisdiction. 27

granted "on the motion of any party,"

and states only "on motion."

Rule 60(b) uses entirely

unqualified

language that a court Land, 178

Case law construing sua sponte.

Rule 60(b) establishes United States v. Certain Circuit

may grant relief under Rule 60(b) F.Supp.2d 792, 801 (E.D. Mich.

2001).

Moreover,

the Fourth

has construed of justice in

Rule 60(b) as not "depriving an unusual means case in which than

the court of the power

to act in the interest to the necessity 298 F.2d judge

its attention United

has been directed States v. Jacobs,

for relief by 472 (4th a

other

a motion." the Fifth

469,

Cir. 1961). judgment

Similarly, under

Circuit

has held that a district McDowell

can vacate 310 F.2d

Rule 60(b)

'on its own motion.' Circuit likewise

v. Ceiebrezze,

43, 44 (5th Cir. 1962). sponte 60(b)(1). Cir.1999). to repair

The Ninth

has held that a judge pursuant

may act sua

mistakes

in judgments

and orders

to Fed. R. Civ. Pro. 168 F.3d 347,352 (9th

Kingvision

Pay-Per-View

Ltd. v. Lake Alice Bar,

For any one or all of these reasons, its judgment 2. on September The August 2, 2004, 18, And 2004,

the District

Court had jurisdiction

to change

and doing Minute

so did not constitute Order Was Not

clear error. An Appealable

Judgment,

Adoption Erroneous

Of The September

2, 2004,

Findings

Was Not Clearly Peterson Findings because argues

that the District Blount's

Court erred in issuing submitted 28 Findings

its September

2, 2004, 18,

it adopted

"verbatim,"

the August

2004, Minute Order was a final judgement, and Blount did not file its Findings on August 31, 2004, by motion pursuant to Fed. R. Civ. P. 52(b). Peterson's analysis is flawed on all three accounts. Peterson begins its argument by verbally thrashing the District adopting Blount's Findings "verbatim," 25-26 of its brief, cites Continental
187 (9th Cir. 1965) for the proposition consider, supported weigh and determine

Court for

and making a mistake? Peterson, at pages

v. Houston Fearless, 350 F.2d 183,

Connector

that 'the district judge of proposed findings

has the duty to carefully and whether they are

accuracy What

by the evidence.'

Peterson

fails to point out in that same case and does notprove findings, that the trial judge failed to and correct and modify them has other

On the same page is that verbatim do his duty to carefully if necessary. examine

adoption

the proposed the appellant

Id. Furthermore,

in Continental,

much like Peterson was, among

done here, argued things, 'meaningless'

that the evidence (i.e. irrelevant)

used to support

these findings

and also 'pure hearsay.' as Peterson which reversals

The appellant

failed to

object at trial to the district court's Ninth Circuit stated:

findings,just

failed to do here, and the are earned.' Id. at 190.

'this is not the stufffi'om

8Peterson's

position

on the District

Court's

mistake

is a bit ironic principal

because

Blount has found a number o fclerical mistakes of which are noted above .... "to err is human." 29

in Peterson's

brief, a couple

Remember, Peterson never challenged the District Court's September 2, 2004, Findings under Fed. R. Civ. P. 52(b), as it had the opportunity to do. Peterson's position on this "verbatim" adoption is hypocritical, to say the least, because when the District Court adopted Peterson's Findings verbatim on June 22, 2004, Peterson vigorously defended those Findings as "without manifest error." (JT-2831-68). Now that the tide has turned against Peterson, it impugns the District adoption. Whatever view one may take of verbatim adoption of

Court's "verbatim"

findings, there is tittle doubt that once adopted, they become the findings of the district court. Anderson
v. City of Bessemer, 470 U.S. 564, 572 (1985); adoption Mathis v. Spears,

857 F.2d 749, 754 (Fed. Cir. 1988).. Even the wholesale standard of review. Roton Barrier, in U.S.v. Inc. v. Stanley ElPaso

does not alter the 1116 (Fed.

Works, 79 F.3d 1112,

Cir. 1996).

Furthermore,

Natural

Gas Co., 376 U.S. 651,656

(1964), 9in which Supreme

a fact situation

arose that was very similar to the one in this case, the announced from the bench that judgment He told counsel They obeyed, would be

Court stated: "the judge

for appellees 'Prepare

and thai he would not write an opinion. and conclusions and judgment.'

for appellees submitting 130

the findings

9peterson highlighted verbatim

cited

this same case in its brief directed to a commentary unless

at page clearly

25, however, erroneous.

it carefully

a footnote adoptions

to draw attention

from the fact that

are not to be disturbed 30

findings of fact and one conclusion of law, all of which, we are advised, the District Court adopted verbatim. Those findings,
the district judge's mind, are formally though not the product of the workings out-of-hand, of and

his; they are notto be rejected

they will stand if supported The Findings by the evidence clearly they erroneous. were adopted

by evidence." by the District numerous Court are thorough citations and fully supported and they are not

in that they contain They

to the record,

were also not submitted well after trial and after

prior to trial. the judge

Quite to the contrary, had come to his own

submitted judgment,

independent standard. Adverse

and the Findings

are subject

to the same clearly

erroneous

to Peterson's

contentions,

the August

18, 2004, Minute s pending

Order was not Rule 59 motion under Fed. with Fed. and ensuing

an appealablejudgrnent

because

it never disposed Further, a separate

ofBlount' document 15, 2004.

for a new trial. (JT--2515-53). R. Civ. P. 58, which

was required In accordance

did not issue until December notes thereof,

R. Civ. P. 58 and the advisory Minute required document Therefore, Order amended

the ruling from the bench judgment,

the District Court's

previous

and hence, mandatorily No such separate as Rule 58 requires. the Fifth Circuit has

that the judgment accompanied there

be set forth in a separate the August 18, 2004, judgment. 31 Minute

document. Order,

was no appealable

Moreover,

specifically held that a Minute Order on the District Court' sdocket cannot constitute a separate document for the purposes ofmeeting the Rule 58 requirement, (post 2002 amendment) regardless of whether that judgment was otherwise appealable as a final order or as an interlocutory order. Freudensprung
v. Offshore Technical Services,

Inc., et al., 379 F.3d 327, 336 (5th Cir. 2004). With at least equal importance, Court of Appeals, determining S.E., lnc., if not more, it has been stated in the Fifth Circuit that "the intention v. Mobil 1990). of the judge is crucial & Producing "[f]inality analysis... by the trial is in

as well as this Court,

finality" 891 F.2d

under Rule 58. Vaughn 1195, 1197 (5th Cir.

Oil Exploration In other words,

determined

on the basis

of pragmatic,

not needlessly

rigid pro forma, manifestation

What essentially court of its belief case." Pandrol

is required

is some clear and unequivocal made,

that the decision USA, LP v. Airboss

so far as it is concerned, Products,

is the end of the

Railway

Inc., 320 F.3d 1354, 1362-3 (2nd Cir. 1993).

(Fed. Cir. 2003) (citing Fiataruolo Given the District that neither Minute Court's numerous

v. United States, actions following

8 F.3d 930,937 August

18, 2004, it is irrefutable August 18, 2004, judgment.

the August

18, 2004, bench

ruling nor the following

Order

were considered 0050-82, also charges

by the District 3065-103,

Court to be an appealable 0083-93, Court 0094). erred because

(JT--3183,

0048,

3064,

Peterson

that the District 32

Blount

did not

submit the requested Findings under Rule 52(b). The concise response to this argument is that Blount did not need to because it was complying with the District Court's Order. If nothing else, Blount was merely acting under the District Court's own directed motion under Fed. R. Civ. P. 60. (JT--3183). This was no different from the first time when the District Court instructed Blount and Peterson to submit proposed Findings. (JT--2445). At that iime, June 10, 2004, neither party submitted
their respective August Findings under a Rule 52(b) motion. Thus, the District to correct The District Court's Order of

18, 2004, was no different. and change its judgment

Court had jurisdiction of adopting

to issue Peterson's

the order Findings

its mistake

on June 22, 2004. on this point, at all times during the remand proceedings, the

In conclusion

District Court retained jurisdiction had occurred. which adopted

and had the duty to correct any mistakes Court corrected its mistake

it believed

The fact that the District its Findings.

is not a basis on Court even if by

to vacate

Furthermore,

the Findings to the clearly

that the District standard,

on September

2, 2004, are subject

erroneous

they were adopted the record,

verbatim.

They are thorough,

well thought

out, fully supported

and most of all, are not clearly

erroneous.

33

B.

The District Erroneous Peterson

Court's

Findings

Regarding

Infringement

Are Not Clearly

attempts factual

to re-try

this case at the appeal level by questioning on the trial exhibits.

the

District Court's is that the District that Peterson infringed Peterson

findings

and its reliance

The simple truth in finding and 15-17.

Court did not clearly

err when it relied on these exhibits in fringed, infringed Claims

directly infringed, the doctrine

contributorily of equivalents,

by inducement,

under

1, 2, 5, 7-9, 11-13 and Court's under

has notmet

its burden of establishing of the evidence Circuit

that the District erroneous

factual findings the standards of

and its consideration review of the Federal

are clearly

and Fed. R. Civ. P. 52(a).

The most Peterson

has done favorable

in its brief, other than cry foul and obfuscate to it. This is not a sufficient and firm conviction Corp., 823 F.2d basis,

the issues, is only cite evidence

at least in this Court, by which has been committed. 1987); Datascope Amstar

to create a definite Corp. v. Envirotech Inc., 879

that a mistake

1538, 1547 (Fed. Cir.

Corp. v. SMEC,

F.2d 820, 825 (Fed. Cir. 1989). 1. Peterson's Court's Direct Infringement of Claims 1,2, 5, 7-9, 11-13 because it

The District

finding of direct infringement customers

and 15-17 by Peterson is based on substantial

and its ultimate evidence.

is not clearly

erroneous

The District

Court first compared

the construed

34

claims against Peterson's device. (JT--0051-65).

In establishing the presence of the

elements of the claims in Peterson's device, the District Court relied on a stipulation between the parties, Mr. Blount's extensive and unrebutted testimony, (JT--0011, 0363-65, 0978-93), its personal observations of4A, Peterson's D31 and D32, which is substantially identical to 4A, Peterson's exhibits D30 and D34, (JT--0974-76, 1149, 1173,0057-65i,_ and the testimony of Bortz, McLaughlin, (hereinafter "Jankowski"), Mr. Vincent Jankowski

Corrin and Mr. Blount, as related to these exhibits. that

Notably, before trial, Blount and Peterson entered into a stipulation

Peterson's EMB was intended to be attached to Peterson's G-4 or G-5 and that the combined unit comprises a primary burner pipe, an ember pan that supports the primary burner pipe, (together which form the G-4 or G-5), Peterson's EMB, and a valve that controlled the flow of gas between the primary burner pipe and the EMB. They also stipulated that an end user would connect the primary burner pipe to a gas source having a valve associated therewith. (JT--0363-65). Even though the parties

stipulated to the presence of all of the major components of Peterson's device, the

mPeterson attacks Blount's exhibit 9, which was an infringement chart used during Mr. Blount's testimony. The District Court's Findings refer to Mr. Blount's testimony and only mention that exhibit 9 was used as a guide. (JT--0057, Finding 40). To the extent the District Court relied on it, such reliance would also be subject to the same clear erroneous standards discussed herein. 35

District Court, nevertheless, meticulously went through each element &claims

17 and found 0057-65). Peterson evidence now challenges the District Court's weight judgment in making in allowing that each element was present in Peterson's assembled device.

1 and (JT--

4A as

and ascribing

the exhibit its appropriate determination

its determinations.

When reviewing standard weighing applies.

a district court's Gardner

in such matters, Devices

the Clearly erroneous Moreover, the

at 1347; Preemption

at 905.

of conflicting

evidence

is a task within the special province is in a better position than thisCourt

of the trial judge to evaluate it.

who, having

heard the evidence,

Fuji Photo Film Co., Ltd. v. JazzPhoto citing State Indus., The District Court's Inc. v. Mor-Flo admission

Corp., 394 F.3d 1368, 1374 (Fed. Cir. 2005), Inc., 948 F.2d 1573, 1577 (Fed.Cir. on 4A is not clearly and authentication. never erroneous. At the outset objected of 1991).

Indus.,

and reliance

Peterson this discussion, trial or challenged 4A. Because

asserts that 4A lacks foundation the Court should

keep in mind that Peterson

to 4A at regarding

it in any way. This is a vital flaw in Peterson's failed to object at trial, it has waived

argument

Peterson

any objection Ironically, to Peterson's

to this issue,

and any review of this, Blount For example,

of it should now be based on plain error. respectfully in U.S.v. directs this Court's Papia, 910 F.2d 1357, 36 attention

for legal support own case law.

1366 (7th Cir. 1990), the appellate

court stated: "Although

Papia argues on appeal that the note was not properly

authenticated, she never mentioned lack of authentication in her objections in the district court. Therefore,
error for the district she has waived the authentication issue unless it was plain 130,

court to admit the note. See United States v. Field,

875 F.2d

134-35 (7th Cir. 1989); Fed. R. Evid. case; indeed, here. Peterson's lack of any objection foundation

103(a) and (d). There was no plain error in this This is precisely what we have

there was no error at all." ld. at 1366.

to 4A notwithstanding, for4A

the District Finding

Court found 38). First, identified 4A was so Jankowski, identified 4A

that Blount did establish Golden Blount identified product.

in two ways. (JT--0057, product, and second, In fact, Blount's own

4A as Peterson's

Jankowski exhibit

4A as Peterson's identical confused as

(JT-- 1077, 1289-90). D31 and D32

to Peterson's

that Peterson's

witness,

the two. When asked to "pick out which is which," product over Peterson's before own D31 and

Jankowski D32.

Peterson's

(JT--1289-90). the trial, and the

Additionally, judge which

4A was present

the District

Court throughout

came down from the bench were both located

and closely table

viewed

4A along with D31 and D32, in the same infringing

on an exhibit

and arranged

37

configuration. (JT--0974-76, 1173-76). _ The District Court also specifically stated that foundation for 4A was further established becauseit was "virtually identical to the picture on page 3 of Peterson's own general installation instructions." (JT--005 7, 231215, Finding 38). Moreover, the District Court had an opportunity to seethe striking similarity between 4A and D31 and D32, just as Jankowski did. These facts simply do not form a basis for plain error. Peterson also makes an issue of the fact that it does not sell the G-4 and EMB as a single unit, but as separate component parts; ergo, 4A could not be Peterson's "product," and the District Court erred by considering it as such. Peterson further

argues that there was never any proof that Peterson ever arranged the device in an infringing manner, i.e., the top of the primary burner was above the top of the EMB. The District Court found otherwise. The District Court found that Peterson
they were meant District to be used together. sold both the G-4 and the EMB and that 0364, 1211-12, exhibits Finding 35). The

(JT--0056-57,

Court relied on Blount's and on the testimony

exhibit

4A, Peterson's

D30, D34 and D31 that

and D32,

of both Bortz

and Corrin,

who each testified

_lMoreover, objection, (JT--3131).

the District Court had an additional

opportunity to observe, an infringing

without

4A during oral arguments;

4A again, illustrating

configuration.

38

Peterson assembled and operated the infringing

device for its distributors,

so they

could have the opportunity to seehow the item worked. (JT--0062-63, 1210-1 1, 1344, 1699-1702). It also found that Peterson had assembled at least ten of the G-5s that included its EMB burner and presumably assembled it in accordance with its own instructions setforth in D30 and D34. (JT--0062-63, 1699-1702, 1787-88, 0057, 121012, 1341-44, 1149, Findings 37, 49-50). The District Court found that since both the EMB and the ember pan, whether it be a G-4 or G-5, were provided to the ultimate customer along with instructions contained in D30 and D34, it was reasonable to conclude that the instructions were used by those customers to assemble the device in an infringing configuration. (JT--0063, Finding 50). Circumstantial evidence of

product sales and instructions indicating how to use the product is sufficient to prove third party direct infringement.
Moleculon Research Corp. v. CBS, Inc., 793 F.2d this even further, configuration

1261, 1272 (Fed. Cir. 1986). Peterson's since Peterson at trial. (JT-Peterson never presented its physical contradict is the one that assembled 1173-74). attempts to misdirect regarding

D31 and D32 substantiates

D31 and D32 in an infringing

this Court's the physical

attention structure

by arguing

that Blount

any evidence remain

of the G-5 unit and that Court's Findings relied clearly on the

differences Peterson's

"unexplained." In Finding 39

The District

position.

35, the District

Court

stipulation between the parties. (JT--0056, 0364). In Finding 36, the District Court stated that the G-4 and G-5 are substantially identical and relied on Corrin's statement that the G-5 was a G-4 except smaller. (JT--0057, Findings are based on evidence and do not constitute
nothing more than point to an opposing Peterson that was offered also questions by Peterson the District to support

1324). The District

clear error. Peterson

Court's
has done

view in an attempt Court's its bottoms reliance

to escape

its judgment.

on D30. D30 is a drawing _"While

test claim construction2

D30 is dated February not indicative disingenuously creation of when

15, 2002, according the document

to Corrin this was a printing (JT-- 1331-32). 15, 2002,

date and was Peterson now to the

was created.

uses the actual

print date of February that Peterson 45).

(as opposed

date) to support of time.

its argument

had only circulated Though Corrin

D30 for a very was not certain and

short period exactly circulated

(Peterson's

Brief, page he testified

when D30 was prepared, even before the lawsuit

that D30 could have been prepared 2001. (JT--1332-33).

was filed on January

Peterson's

exhibit D30 shows that when installed

as recommended

by Peterson, meeting

the top of the EMB is below the primary

tube by at least 0.06 inches,

thereby

_2During Trial Peterson was raised with respect which was previously rejected. (JT--2435-36).

urged the District

Court to determine

whether

one tube

to the other by referencing the bottoms o fthe respective tubes, noted in this case as the "bottoms test," Which this Court

40

the "raised level" and "below" elements of claims 1 and 17, respectively. (JT--2305). Peterson attempts to obscure this plain evidence by pointing to other evidence that Peterson believes this to be "generally level." Unfortunately for Peterson, while 0.06 inches below might be generally level in Peterson's mind, it is still below for purposes of literal infringement. Moreover, there is no doubt that Peterson distributed these

instructions to its customers. Corrin unequivocally testified that this drawing was distributed to Peterson's customers, and it was given to them so that an installer or customer would know how to install the EMB, and he even admitted that D30 shows that the EMB tube normally would be installed just slightly below the top of the main burner tube. (JT-- 1328, 1317-19). No matter how long it was distributed, it stands as irrefutable evidence of what Peterson thought was a proper installation. The District Court recognized this and found that Peterson and its customers did infringe when the device was assembled using the instructions of D30 or D34. (JT--0062-63, Findings 49-50). Peterson states that when D34 is followed, it does not result in an infringing configuration. D34 is the general instructions included with each device. (JT--2312-

15). Step 10 of these instructions states that the valve should be flush with the burner pan, which rests on the fireplace floor. (JT--1693-94, 2314). Other evidence

established that when installed as recommended, the valve rests on the fireplace floor 41

and the valve supports the EMB. (JT--0059-60, 1693-94, Finding 42). When in this configuration, the "raised
1173-74, 1059-60, level" element was present in D31 and D32 and 4A. (JT-that

3131 ). Peterson

attempts

to confuse the issue here by arguing

the removable high enough

control

knob is an integral

part of its EMB and that its EMB must be own brochure that

for the knob to be used. knob is removable to prevent

This is refuted by Peterson's

shows the control desired setting

and even states that it can be removed the knob from becoming

after the

is achieved it is attached

too hot. 0%-2315). floor, (JT--

Furthermore, 2315,

after the valve is positioned

against the fireplace installation.

1693-94), Peterson

and thus, has nothing argues with the District

to do with a proper Court's factual

findings 'flush (Peterson's

by stating

that "no pan' 14).

evidence results

shows

that installing 'resting

its [EMB]

with its valve floor.'

with the burner Brief, page

in the valve Peterson

on the fireplace

Obviously,

is not aware

of the testimony

of Bortz, who testified

that when the and alleges. its

the EMB is installed, EMB. (JT--1693-94). proves and

the valve rests on the fireplace This clearly supports

floor and the valve supports Court's findings

the District

conclusively Further, arguments

that it is not an "embellishment" more importantly, supports Peterson's the District

by Blount, own Court's D31

as Peterson and D32

belies

and unequivocally that Peterson

Findings.

D31 and D32

is the exhibit

wants to desperately 42

ignore because

this is the device on

which a level was placed across the primary burner tube and the EMB during trial to show the presence of the "raised level" element of claim 1 and the "below" element of claim 17. (JT--0059-65, Finding 42, 60). Much to Peterson's chagrin, D31 and D32 showed that the "raised level" element was present. (JT--1171-74). Thus, even

Peterson, when assembling its own trial exhibit, could not help but construct an infringing device when attaching its EMB to.its G-4._3 It is interesting to note that even if the valve was not resting on the table, which it was, the primary
with respect to the EMB in Peterson's device D31 and D32. the District Court's findings the tube was still raised

Based on th e foregoing, that Peterson District 2. and its ultimate findings

the record amply supports customers directly

infringed

the Patent.

As such,

Court's

on this point Contributory the specious are

are not clearly Infringement

erroneous.

Peterson's makes

Peterson contributory infringement

argument

that the District because

Court's there was

findings no

of

infringement by Peterson

clearly

erroneous

direct based

or others

and tries to use an "admission"

by Blount

on a hypothetical

fact that did not exist in the case.

The first prong

of Peterson's

13No

doubt

Peterson

will

viciously

fight because

to keep Peterson

the District realizes it proclaims

Court

from

correcting

the clerical error in its judgment, dooms its own arguments (see fn.2, supra).

how thoroughly Peterson's

D31 and D32 infringement.

and how clearly

43

argument is deficient because the District Court found, without clearly erring, that there was direct infringement by Peterson and others, as discussed above. The

second prong of Peterson's argument fails because Peterson never presented any facts that its device was ever assembled in a non-infringing manner. Furthermore, a device

may infringe if it hasthe present capability o f functioning in the samemanner described by the claim, see lntel Corp. v. United States Int'l Trade Comm 'n, 946 F.2d 821,832
(Fed Cir. 1991 ). As presented intended above, the District Court correctly found that Peterson instructions intended D30 and it to be used at

its EMB to be used with a G-4 or G-5, that Peterson's configuration, and that Peterson

D34 would lead to an infringing that way. Peterson trial. (JT-- 1173-74). device

even assembled

its D31 and D32 in an infringing there is not one instance

configuration where Peterson's

Based on the record,

was ever assembled

or used in a way where burden

both tubes were level with each such evidence Scanning, at trial, but

other, and it would it didn't.

have been Peterson's Scientific

to present

See, Electro

Industries,

lnc. v General points

Inc., 247 F.3d based on standard. that never

1341, 1353 (Fed. Cir. 2001). a hypothetical Peterson's existed fact pattern

Instead,

Peterson

to a single statement the clearly erroneous

in its attempt

to overcome

position

is untenable, the District

and using Court's

a hypothetical Findings clearly

fact situation erroneous.

does not make As the District

Court found,

Peterson, 44

as early as December

16, ! 999, was

placed on notice for infringement

uses. (JT--0066, Findings 63-64).

and that the device had no substantial The record supports

non-infringing Findings. have that

the DistrictCourt's

Bortz testified that its EMB was not a staple article of commerce anyuse apart from being used as an EMB. (JT-- 1211-13, 1669).

and that it didn't Con-in testified

the EMB was intended and the parties testified Peterson's

to be used with the G-4 and could also be used with the G-5, to this. (JT-- 1323-24, 0364). Additionally, (JT--1001). Mr. Blount Clearly,

even stipulated know

that he didn't device

of any other use for the EMB. article of commerce an infringing D34, and D31

was not a staple

because

it had one use and resulted, Even as

one use only. established Peterson's

When through

used in that manner, exhibits 4A, D30,

configuration and D32.

though

device

could be arranged if it is reasonably Corp.,

in a non-infringing of satisfying 1343

configuration,

it can still be Hillgrave

found to infringe Corp.

capable

the claim limitations. (Fed. Cir. 2001).

v. Symantec device

265 F.3d

1336,

In this case it was

Peterson's intended District

was not only capable

of satisfying 0062).

the claim Given

limitations,

to do so and, in fact, did. (JT--0056, Court's Findings on Peterson's

the facts in this case, the are not clearly

contributory

infringement

erroneous. 3. Peterson's Court Induced found Infringement that Peterson 45 also induced others to infringe the

The District

Patent. (JT--0066-67).
had notice of the Patent

It based its Findings as of December

on, among

others,

the fact that Peterson provided have known D30 and

16, 1999, that Peterson knew or should

D34 to its ultimate actions would

customers,

and that Peterson

that its

cause others

to infringe.

(JT--0066-67). to its distributors

The District

Court also noted because (JT--

that the demonstration this information 0066-67,

of the device

was also inducement assemblers

was ultimately

passed on to dealers,

and customers.

1334-35). takes issue with the District the instructions Peterson Court's Findings by first proffering the

Peterson argument

that following

set forth in D34, (JT--2312does finally

i 5), would not lead can be

to infringement.

Interestingly, follows

admit that inducement

found when a third-party configuration, regarding reading D34. of D34, (Peterson's

disseminated

instructions

that lead to an infringing its argument A close lead to

Brief, page 48), and then goes on to make Court found contrary other evidence to Peterson's from

The District along with

assertions. does

obtained

Peterson,

infringement.

Step 10 of these instructions

clearly states that the valve should be flush floor. (JT--2314, pan is for them Moreover, 1693-94). The only

with the burner pan, which rests on the fireplace way that the valve floor, otherwise instructions can be flush with the burner makes no sense. testimony 46

both to rest on the of the

the language

this plain reading

is affirmed

by Bortz'

where he testified

that the valve rests on

the fireplace floor and the valve supports the EMB. (JT--0059-60,

1693-94, Finding

42). It is equally affirmed by the devices themselves. At trial, the valves of both 4A
and D31 and D32 were resting configuration. on the table, Moreover, D32. When (.IT-- 1173-74, on the table and both devices 0059-60). were in an infringing

1059-60,

Even if the valves were not resting configuration. its own D31 and

both D31 and D32 and 4A were still in an infringing that Peterson knew how to assemble resulted.

one must assume

it did so, an infringing

configuration

(JT--1173-74).

Thus,

following D32.

D34 would lead to an infringing before

configuration,

as shown by4A

and D31 and its

Given the evidence of D34. continues

it, the District

Court did not clearly

err regarding

consideration Peterson Peterson to prove

to distance

itself from its own incriminating

exhibit,

D30.

argues that D30 was not"regularly'disseminated just how many times it was disseminated, Peterson,

and that since Blount failed it did not prove its induced case law. 1263,

infringement Peterson

case. In making its arguments, Holdings

once again, misapplies Corp.,

relies on Dynacore

Corp. v. U.S. Philips

363 F.3d

1274 (Fed. Cir. 2004). failed to prove

In Dynacorel

the district court, unlike here, held that Dynacore infringement. Id. at i272. During appeal,

its allegations

of direct

Dynacore

alleged an alternative

hypothetical

way that would lead to direct infringement acts," which this Court was

that the district

court did not consider.

The "identified 47

addressing in Dynacore
This is affirmed F.3d

was some established citation

act, or acts, of direct infringement. Co. v. Mee Industries, 341

by this Court's

to Dow Chemical

1370 (Fed. Cir. 2003). In Dow, the district of April court limited the scope of Dow's According claims testimony infringement to the District case to "its Court, two (filed

expert

reports

13,2001

." Id. at 1379. the apparatus

of those reports

failed to address

at all. The third report during

by Dow's patent expert), by the District of the evidence, was no identified

along with that expert's

trial, were described by a preponderance Id. Thus, there from the

Court as "conclusory" that the Defendants

and "insufficient infringed

to prove,

[the apparatus

claims]."

act of direct infringement.

This is substantially exist.

different

case at hand, where many identified Court found record direct infringement the District also points

acts of direct infringement by both Peterson Findings.

Here, the District customers and the

and its ultimate

supports Peterson

Court's

to D30 as evidence

of its good faith belief that it was not have known" standard of induced alternative evidence.

knowingly infringement portion

infringing

and the "knowing

or should

was not met. This argument A patentee

ignores the "should

have known" circumstantial

of the standard. (finding

may prove intent through defendant

Fuji at 1377-78 believe

that although

took the position patent

that he did not the record

refurbishing

LFFPs

had any effect 48

on plaintiff's

rights,

showed defendant was aware of plaintiff's

infringement contentions). Moreover, as

discussed above, Peterson had received an infringement notice letter from Blount, which is also sufficient to impart requisite knowledge. Aro Manufacturing
v. Convertible Top Replacement on Peterson's that Peterson Co., 377 U.S. 476, 489 (1964). stipulation issued of what its device Co., Inc. Court with as of have

The District along notice would

found that based the instructions December

comprised,

in D30 and D34,

and Peterson's that its actions

16, 1999, Peterson

knew or should have known Findings 66-72).

lead to infringement. to support the Patent, 4. the District

(JT--0066-67, Court's

There is evidence induced its customers

on the record to infringe

finding

that Peterson

and itS, findings The Doctrine

are not clearly of Equivalents

erroneous.

Due to the fact that the District the District equivalents Findings

Court found literal infringement, to its analysis assertions,

any error that of

Court might have made with respect is harmless error. Contrary

under the doctrine the District Court's

to Peterson's

cannot remove,

under the doctrine

of equivalents,

a limitation

that is clearly

stated in the claims. District Court's

Given the presence

of the "raised erroneous

level" element

in the claims, the error.

Findings

are not clearly

and at most are harmless

49

C.

Peterson's Peterson

Willful grossly GMBH,

Infringement mischaracterizes the holding in Knorr-Bremse Knorrdoes Systeme

Nutzfahrzeuge proposition counsel, This

383 F.3d 1337 (Fed. Cir. 2004).

not stand for the of 56). the

that the duty of care does not "include much less a 'competent never made such opinion' a holding.

a duty to obtain any opinion (Peterson's Brief, page

of counsel." What

Court

this Court

said was: "When

defendant

had not obtained

legal advice, is it appropriate The answer,

to draw an adverse

inference

with respect o fprivilege, counsel, presumption (Emphasis this Court's affirmative others."/d.

to willful infringement? but whether

again, is 'no.'

The issue here is not to consult with

there is a legal duty upon a potential to do so will provide would have been

infringer

such

that failure that such

an inference negative."

or evidentiary Knorr at 1345 after

opinion

added).

The duty of care on the part of a potential Knorr, to avoid

infringer

remains

en banc decision. duty of due care

went on to stress that there continues infringement of the known patent

to be "an rights of

Moreover, drew no adverse against its willful

Knott

is not applicable Peterson

in the present

case because

the District

Court

inference.

offered

up the "opinion"

of counsel

as a defense purview.

infringement, makes

and brought

it under the District

Court's

Furthermore,

Peterson

a gross misstatement 50

of the facts when it states: "The

Court's sole basis for finding willful infringement,

sought by plaintiffarising in which Peterson's was invalid out of the allegedly

however,

was an adverse inference or meticulous manner

less than formal

patent counsel,

Mr. William McLaughlin, Brief, pages

advised it that the Patent 55-56, emphasis added). the

and not infringed."

(Peterson's basis

This was not the "sole" way in which Court serious troubled disregard District associated Peterson Bortz' the opinion concerns

for the District and when earnestness

Court's

finding.

No doubt,

was rendered

it was rendered regarding its findings,

gave the District

about Peterson's

its duty of care. What was Peterson's willful the

the District

Court even more, and justified In Finding found 111, which

for the Patent. Court specifically

Peterson

conveniently

ignores, about

that Peterson

was not concerned

damages fees that By case to pay

with its infringing might be required

activity,

but apparently infringer.

with the attorneys' (JT--0073,

to pay as a willful

1205-07).

own admission, of the "dollars

he told McLaughlin at stake"

that this was not a very meaningful a person might have

in terms attorneys'

but that he heard lawsuit,

fees if he loses a patent 1894).

and he asked McLaughlin

what he should Peterson' s

do. (JT-- 1205-07, true intentions more concerned

The District

Court found that this underscored disregard attorneys' Court for the Patent; fees than

with respect with In view

to its willful to pay

that Peterson with

was

having of this,

it was that

its own action

infringement.

the District 51

found

Peterson's

constituted an intentional disregard for the Patent. (JT--0073). In Finding 114, the District Court found that because Peterson's primary desire was to avoid paying attorneys' fees or increased damages, this was the sole reason for consultation with counsel, and these actions showed a willful and egregious disregard for the Patent. (JT--0074). Findings 115 and 118 provide additional Findings of the

District Court that controvert Peterson's argument. (JT--0074). Contrary to Peterson's assertions, it was Peterson's willful disregard of the Even

Patent that caused the District Court to find Peterson was a willful infringer.

under Judge Dyk's concurring opinion inKnorr, such actions would most likely rise to the level of"reprehensible willfully conduct." The District Court's Findings that Peterson

infringed the Patent are amply supported and are not clearly erroneous.

D.

Damages Peterson has not met its burden of showing

that the District Blount Court's need Findings only show

Of awarding causationand profits.

damages

to Blount

are clearly

erroneous. between

the factual

basis for causation

the infringement

and the lost

Lain, Inc. v. Johns-Manville established during

Corp., 718 F.2d 1056, owner need

1065 (Fed. Cir. 1983). only demonstrate: during l) a that

To do this, Panduit demand

that the patent the period 52

for the product

in question;

2) an absence,

period, of acceptable non-infringing

substitutes; 3) its own manufacturing

and

marketing capability to meet or exploit that demand; and 4) a detailed computation of the amount of the profit it would have made. Panduit
Works, Inc., 575 F.2d 1152, Inc., 788 F.2d 1156 (6th Cir. Mich. 1554, Corp. v. Stahlin Bros. Fibre Co. v.

1978); Radio

Steel & Mfg.

MTDProds.,

1555 (Fed. Cir. 1986). factors to determine damages and found argument showed a It

The District that Blount that Blount demand

Court used the Panduit

established

all of them. (JT--0068-70). The District

This rebuts Peterson's Court found that Blount (JT--0994-95, o facceptable established (JT--0069,

failed to show causation. during

for the product showed

the period

in question:

0969-70). non-infringing evidence

found that Blount substitutes,

an absence,

during that period,

(JT--0996-98),

and it also found that Blount to handle the demand. factors. established,

that it

had the manufacturing evidence establishes

capacity

0999).

Thus, the

the first three Panduit of Panduit

With the first three factors determining Court found respect testified -0996-98). the amount of profits.

the District

Court turned to the District with

For purposes market existed

of determining between 099698, Blount Finding

profits,

that a two-supplier device.

and Peterson 88).

to the patented that Blount

(JT--0069-70, controlled

Mr. Blount

and Peterson

about 95 percent

of the EMB market. (JTprovided the patent

In a two-supplier

market

it is reasonable 53

to assume,

owner has the manufacturing capabilities, that the patent owner would have made the infringer's sales "but for" the infringement. State Indus. v. Mor-FloIndus.,
1573, 1578 (Fed. Cir. 1989). and convoluted Peterson arguments Findings offered no evidence 8 83 F.2d

to rebut this. Peterson's to sustain its burden erroneous. Blount of

unsupported showing

are not sufficient

that the District argues

Court's

on this point are clearly

Peterson offered repudiates Peterson Peterson number

that the "but evidence position.

for" causation

test also fails because products were sold.

no competent Peterson's

of how Peterson's As discussed

The record how that

above,

the evidence further

establishes establishes

sells its EMB

and its G-4 and G-5.

The record to ultimate

sold both the G-4 and G-5 and EMBs of types of its artificial The record

consumers its distributors

with one of a or retailers. is sold,

logs and a log grate through that 97 percent

(JT--1322-24).

establishes

of the time an EMB Blount bought

it is sold with a standard to negate product Paper every possibility

ember

pan (G-4 or G-5). might

Moreover, not have

is not obliged the patentee's altogether. 11, 21 (Fed.

that a purchaser

instead of the infi-inging one, or might have foregone Converting Machine Co. v. Magna-Graphics Corp.,

the purchase 745 F.2d

Cir.1984). Peterson know anything attempts to disparage Peterson Hanfi's testimony by arguing that he didn't as a whole

about how

sold its products, 54

but the record

establishes to the contrary.

It should be noted that Hanft had more than 12 years of

experience in the artificial gas logs business, and he was not an exclusive retailer for Blount because he did sell a few of Peterson's products. (JT--1085). Moreover, on

re-direct Hanft testified that, based on his own experience, the way in which he sold his products was typical of the way other retailers (including Peterson's products) sold their products. (JT--1098-99). those who sold

The District Court had

sufficient evidence on which to base its Findings. As the District Court found, Blount is entitled to actual damages due to the fact that the evidence establishes the presence of all of the Panduit
Peterson Contrary factors. about the time frame from which damages were calculated. from the of the

is mistaken

to Peterson'

s assertions,

the District Court calculated

the damages

date of the first notice Patent. amount Blount'

letter, December Peterson

16, 1999, and not from the issuance is further grossly mistaken

(JT--0538-51,0821-23). of damages s lost profits were obtained. attributable implies.

as to how the from

The amount

of damages

were determined

to the sale of both the EMB and the logs and not the The District Court relied on claim 15, which recites market value rule". Beatrice 1171, Foods

EMB alone, as Peterson

the logs and grate, or alternatively Co. v. New England 1991); See Rite-Hite Printing v. Kelsey

on the "entire

& Lithographic

Co., 899 F.2d

1175 (Fed. Cir.

Co., 56 F.3d 1538, 1550 (Fed. Cir. 1995), (JT--0121, 55

col. 8, Ins. 20-24, JT--0070-71).

Accordingly, the device for calculating lost profits

includes the entire bumer assembly (including the EMB and valve), the grate and a full set of artificial logs, which must be the case here, because apart from the artificial logs and grate, the EMB unit has no purpose or function. Furthermore, the record supports the District Court's Findings. Con'in testified at trial that Peterson used the EMB to entice customers to come back to the store to purchase newer log sets, and at the same time, purchase Peterson's EMB, which improved the overall appearance of the fireplace. (JT--1322-24). AdditionallyHanft

testified that the glowing embers from the EMB is what draws a customer' sattention to a particular log and burner set, and what ultimately makes the sale. (JT-- 1091-94). Blount also offered testimony attrial that the elements
constitute that "ifI a functional unit with the artificial (as covered of independent Claims 1 and 17

log s and the grate support. by the patent)

Hanft testified 39

sold 40 more CEBBs

from this day forward,

would go with a log set." (JT--1093). discretion in its finding, and Peterson

Therefore,

the District

Court did not abuse its in overcoming this

has not sustained

its burden

high standard. Peterson interchangeable. Moreover, also asserts that Blount's and Peterson's products required are not

Interchangeability

is not one of the factors were an issue, the testimony 56

by Panduit.

even ifinterchangeability

given by Mr. Blount,

offered without Peterson's objection, clearly establishes that the structures were identical in every respect, which is supported by the comparison above, (JT--0978993), and would inherently be interchangeable. This red herring should be ignored.

Peterson attempts to convince this Court that the District Court erred in not reducing the lost profit damage award by the alleged return of 802 units that Peterson asked tObe returned only afierjudgmenthad
the sole purpose of reducing damages. been rendered in favor of Blount and for

This is akin to shutting

the barn door after the 802 instances of

cows have left. Peterson contributory or induced

mistakenly infringement.

thinks that it can "uninfringe" The District Court determined or induced

that there was stood

direct infringement, by itself. its position Moreover,

after that, each act of contributory Peterson has provided no relevant

infringement

case law on point supporting a party from undoing attempting

as to the returned of a patent

units. Equity alone should prevent to reduce damages, as Peterson which

its infringement to do.

is apparently appears

In the absence

of case law to the contrary, that any Uncertainty owner.

to be the instance from infringement Inc. v. Quinton Inc.,

here, the courts are in agreement should be resolved

as to damages

in favor of the patent

Del Mar Avionics,

Instrument

Co., 836 F.2d 1320, 1327 (Fed. Cir. 1987); Kaufinan 1141(Fed. Cir. 1991). Here, if any uncertainty

Co. v. Lantech,

926 F.2d 1136,

were to exist in the and refuse

mind of this Court as to damages,

this Court should rule in favor of Blount 57

to subtract the allegedly returned units. In view of the substantial

discretion in determining facts before the District Court, it did not abuse its

the lost profit

damages.

E.

Exceptional In addition

Case to Section 284 of the Patent Act requiring "damages adequate damages Act to

compensate up to three authorizes prevailing of Section determine determining attorneys' finding

for the infringement," times the amount

as well as allowing found or assessed,"

the court to "increase Section reasonable

285 of the Patent attorneys'

the court in exceptional party. 35 U.S.C.

cases to award

fees to the

285 The Federal a two-step is exceptional."

Circuit

has interpreted "First, the district

this provision court must After whether

285 as requiring whether a case

process:

See, Enzo court

Biochem

at 1370.

that a case is exceptional, fees are appropriate.

the district

must determine

Id. An award

of attorneys'

fees, if based on a proper court abused its

of an exceptional

case,

can only be altered

if the district

discretion. The statutory interest ofjustice purpose of an attorneys' fee award is to reach cases where the

warrants

fee-shifting.

Brooktree

Corp. v. Advanced

Micro Devices,

Inc., 977 F.2d 1555, 1582 (Fed. Cir. 1992). 58

Thus, the trial court has broad discretion

in the criteria by which it determines whether to award attomeys' fees. Id. A finding
of willful infringement Id. As the District meets one ofmanypossible Peterson's criteria of an 'exceptional legal advice, case.' and

Court found,

sole purpose

of seeking

only then after the lawsuit Infringement damages considered of the Patent be small.

was filed, was for avoiding was not Peterson's In essence,

attorneys' because

fees. (JT--0073-74). it thought to gamble that the what it

concern

would

Peterson

was willing

to be a pittance have

at the risk of taking fees.

the property The District

of another Court

until it found Peterson's 111, 114, set forth would Court in

out that it might actions

to pay attorneys'

found Findings

to constitute

a willful disregard

of the Patent. (JT--0073-74,

118). A_s stated above, even if this Court were to adopt Judge Dyk's in Knorr, as urged by Peterson, Peterson's actions

position

in view of such conduct Undoubtedly, the District

surely rise to the level of"reprehensible did not clearly awarding contrary. err in finding

conduct."

the case exceptional, fees. Peterson

and it did not abuse its discretion has utterly failed to establish

Blount's

its attorneys'

to the

59

CONCLUSION For the reasons Affirmed. Respectfully submitted, stated above, the judgment of the District Court must be

Charles

W. Gaines

Greg H. Parker HITT GAINES, P.C. Palisades Central II 2435 N. Central Expy., Suite 1300 Richardson, Texas 75080-3560 972-480-8800 William
SCHULTZ

D. Harris,
&

Jr.

ASSOCIATES

5400 LBJ Freeway One Lincoln Centre, Dallas, Texas 75024

Suite

1200

60

CERTIFICATE Theundersigned, Inc., hereby certifies with the type-volume Appellate Procedure.

OF COMPLIANCE Counsel of Record

WITH

FED.

R. CIV. P. 32(e)(7)(B) Golden Blount,

for Plaintiff-Appellee,

that this Briefo fPlaintiff-Appellee limitation provided

Golden Blount,

Inc. complies Rules of program

in Rule 32(e)(7)(B)

of the Federal

In preparing

this Certificate, contains

I relied on the word-count

of Corel WordPerfect

8. This Brief

13 877 words.

Charles

W. Gaines

Greg H. Parker HITT GAINES, P.C. Palisades Central II 2435 N. Central Expy., Suite 1300 Richardson, Texas 75080 (972) 480-8800

Counsel for Plaintiff-Appellee Golden Blount, Inc.

Dated:

June 3, 2005

61

CERTIFICATE I, Charles W. Gaines, Brief of Plaintiff-Appellee 2005, to opposing counsel

OF SERVICE copies of the foregoing

certify that two true and correct Golden

Blount, Inc. were sent by Express Mail on June 3, address: Jr.

at the following Leland

W. Hutchinson,

Jennifer L. Fitzgerald David S. Becker FREEBORN & PETERS 311 South Wacker Drive Suite3000 Chicago, Illinois 60606

Charles Greg

W. Gaines

H. Parker

khan" GArNES, P.C. Palisades Central II 2435 N. Central Expy., Suite Richardson, Texas 75080 (972) 480-8800 1300

62