Sri International v. Matsushita Electric Corporation of America and Matsushita Electric Industrial Co., Ltd.

SRI International (SRI) appeals from a final judgment of the United States District Court for the Northern District of California granting summary judgment of non-infringement to Matshushita Electric Corporation (MEI). 591 F.Supp. 464, 224 USPQ 70 (1984). We reverse.

Familiarity with the district court's opinion being assumed, only those factors necessary to an understanding of this court's decision will be discussed here.

The district court's opinion contains an excellent explication of the technology involved, reflecting a clear recognition of the undisputed fact that the filter and camera embodiment described in the specification of SRI's United States Patent No. 3,378,633 (the '633 patent) issued to SRI as assignee of the inventor Dr. Albert Macovski on April 16, 1968, operate somewhat differently from the MEI filter and camera accused of infringement.

Each claim charged to have been infringed is drawn to a structure. Because of its central role as the broadest, claim 1 is set forth:

1. A spatial filter for affording a monochrome recording from which upon subsequent scanning, information for reproducing an image in color of the object photographed may be derived, said filter comprising a first grid of parallel spaced lines having the color of a subtractive primary, a second grid relatively angularly superimposed over all of the said first grid, said second grid having parallel spaced lines having the color of another subtractive primary, each grid having the same line density.

Claim 2 depends from claim 1, adding only "the relative angle between the first and second grids is 45?." Claim 7 and dependent claim 8 are drawn to a camera in combination with the filter of claim 1. Claim 9 and dependent claim 10 are drawn to "apparatus for generating the color representative electrical signals required for a color television receiver to reproduce a scene in color," and include the filter of claim 1.

Claim 3 was not charged to have been infringed. It is set forth because it affects the question of claim interpretation:

3. In a camera of the type wherein light from a scene being photographed is focused by a lens on black and white, monochromatic sensitive film, the improvement for affording a recording of the color information in the scene being photographed on said film in a manner so that said color information may be electronically derived therefrom comprising a filter adjacent said film, said filter having a first grid of vertical spaced lines which are colored cyan, and superimposed over all of said first grid a second grid having its lines at a 45? angle to the lines of the first grid, said second grid lines being yellow in color, both said grids having the same line density. [Emphasis added.]

The district court's Memorandum Opinion included helpful illustrations, that of SRI's filter being based on Figure 1 of the '633 patent drawings. Figure 1 shows an embodiment of the invention set forth in claim 1, in which one grid is superimposed over all of the other grid, the equi-width stripes of one are vertical and those of the other are angled to the vertical. In the operation of that embodiment, the horizontal distance travelled by the scanning beam in a single pass ("scan line") across and between angularly disposed stripes is greater than that across and between vertical stripes. Thus, the frequency range generated by interruptions in a single pass across the angular grid is lower than that across the vertical grid, and two basically discrete (red and blue) carrier frequency ranges are generated at that point. The frequencies are then decoded by low and band pass filters.

In the MEI filter, one grid is superimposed over all of the other grid and both grids have equi-width stripes, but the stripes of the two grids are at equal and opposite angles to the vertical. In operation, the horizontal distance travelled by the scanning beam in a single pass across and between stripes of both grids is the same, and the red and blue carrier frequency ranges thereby generated are the same at that point. However, the phase difference between successive, timed scanning passes produces a concentration of red and blue components at alternating, overlapping, or interleaved frequencies. To delay successive passes and decode the interleaved frequencies, MEI employs a 1-Hertz (1-H) delay comb line filter.1

(a) Preliminaries

On July 19, 1982, SRI filed a complaint and jury demand, alleging MEI's willful infringement of claims 1, 2, and 7-10 and seeking treble damages, costs, attorney fees, and an injunction. That same day, the district court scheduled a status conference for October 22, 1982. On September 29, 1982, MEI filed answer, alleging invalidity, unenforceability, and non-infringement, and a counterclaim for declaratory judgment of invalidity and non-infringement.

In April, 1983, the parties filed extensive briefs.

On October 19, 1983, the district court issued a comprehensive Second Order for Pretrial Preparation, setting April 30, 1984 for "Trial before the Jury".

The October 19, 1983 order required the filing of exhibits, witness lists, summaries of all proposed testimony, statements of experts' theories with conclusions and bases therefor, experts' curriculum vitae, and reports prepared for testimony. The order form also contained a requirement applicable "In non-jury cases", i.e., the filing of a written narrative statement of the proposed direct testimony of each witness.

The October 19, 1983 order also required the filing of objections to testimony or exhibits, with the ground for each objection.2 Pursuant to another order of the same date, the parties were required to prepare statements of fact which each party contends should be submitted to a jury for determination.

In response, on January 20, 1984, counsel for SRI wrote the court, listing among the issues for the jury the question of whether MEI's filter is "so far changed in principle" that SRI's and MEI's filters are different inventions (MEI's position) or different versions of the same invention (SRI's position), quoting Westinghouse v. Boyden Power Brake Co., 170 U.S. 537, 568, 18 S.Ct. 707, 722, 42 L.Ed. 1136 (1898).

On February 2, 1984, counsel for MEI wrote the court, saying that: no issue required jury determination; the issue is whether the claims can cover MEI's filter; that issue is one of claim language scope and a matter of law; and whether MEI's camera functions in a basically different manner is a legal question, citing Kalman v. Kimberly Clark Corp., 713 F.2d 760, 218 USPQ 781 (Fed.Cir.1983).

(b) February 10, 1984 Pretrial Conference

A February 10, 1984 pretrial conference to narrow the issues began with a late attempt by MEI's counsel to bar the inventor (Dr. Macovski) as an expert witness because of his financial interest in the outcome of the litigation. MEI's counsel said they had originally considered objecting on the ground that "[t]he subject matters [sic] as to which Dr. Macovski is going to testify is so far outside of anyone's real world experience that it's almost impossible to evaluate without appropriate technical background and credentials," and was therefore not appropriate "to go to a jury."3 That objection was not made. The court overruled the objection with respect to financial interest on the ground that SRI would be prejudiced if denied its witness on the eve of trial.

The court then turned to the purpose of the conference, i.e., determining "whether there are any issues here involving conflicts of facts." Having read the papers then on file, the court concluded:

It seems to me, under the particular recent decisions under the Federal Circuit, it's a pure question of deriving ultimate facts from undisputed evidence which is properly done by the judge. Mr. Gregg, I have read your papers carefully, but I don't see any factual issues that would be proper for a jury.

SRI's counsel then said: "That if there are no evidentiary facts in dispute, this is a case that is ripe for summary judgment. And I would suggest under those circumstances and with your Honor's consent, that the defendants bring a motion for summary judgment." When the judge asked whether SRI wished also to bring a summary judgment motion, SRI's counsel said it did not because counsel believed there were factual disputes present.

Asked to identify the disputes, SRI's counsel responded:

The dispute with respect to infringement largely evolves around this: There is no question but what the words of the claim, as we say, "read on," cover, define, not only the structure in the 633 patent, which is in suit here, but the structure which the defendants used.

And in accordance with the Supreme Court's decision in Graver vs. Linde, you look to the words of the claim, and do you determine whether or not they cover what the accused device is; and if it does, infringement is made out, and that is the end of it.

But there is another side of the coin, and the other side of the coin is this: That if the invention, if whatever the defendant has, if his device is so utterly different in principle from the device which is described in the patent, then regardless of the wording of the claims, the claims have not validly covered it. And that is the issue with respect to infringement, the principle [sic] issue as to whether or not the system which is used by the defendants in this case is so different in principle that it's an altogether different invention. One is an apple; the other is an orange.

And that seems to me to be mainly a fact of determination, and so on down the line.

Well, I don't think so.... [I]f the issue in this case is whether a thing which is colored orange, has [a] peel about an eighth-inch thick, ... and once it's peeled, it's sectioned, those facts are undisputed. The question is whether the ultimate fact may be derived from that evidence that it is an orange.

That doesn't strike me as a jury issue. That strikes me as an issue that is appropriate for a judge to decide, particularly if oranges are rather obscure kind [sic] of things in the common experience of a jury. There is no dispute it has certain kinds of seeds inside. There is no conflict, in other words, in the evidence. There is only a conflict in the interpretation of the evidence.

It strikes me that is appropriate for a judge to decide. Whether it should be decided on summary judgment or not is another question. I wouldn't keep anybody from making a motion for summary judgment, but it would be useful in this case for the court to hear the testimony of the experts because I think the court needs some enlightenment on some rather technical questions.

After some discussion of evidence of obviousness, the court stated:

I just don't see any dispute here, and it seems to me that these are all legal issues, that is, they are issues of ultimate fact concerning the application of principles such as obviousness, anticipation, infringement, to undisputed facts.4

Of course, Mr. Gregg, the two sides will present different evidence, but that doesn't mean there is any conflict in the evidence. And in the absence of an evidentiary conflict, I don't see a jury issue in a patent case.

MEI's counsel at that point said he would move for summary judgment "if it were done in a manner which I think would be permitted by the rules, where on the motion the court could hold an evidentiary hearing which would permit the court to hear the experts at least, and in a live situation develop an education as to the subject matter."5

The court then described its procedure in bench trials, under which, to preclude surprise and facilitate preparation for trial, written narrative statements of testimony are exchanged, and the record after trial would become those narrative statements plus testimony adduced at trial. The court added:

And that way the record will be a combination of the narrative statement of testimony, plus the testimony adduced here. Now, that is not summary judgment, but it is a bench trial, and it anticipates the testimony and provides everybody with a complete statement of testimony and exhibits in advance.

Now, that will be my way of proceeding in this case. I don't think it's appropriate for summary judgment just because I would want the live witnesses. But I do think we can resolve these questions fairly and intelligently in a reasonable fashion in this way, and also I think more economically and expeditiously.

Usually when trials are conducted in this fashion, they don't take as long as people anticipate.

The February 10, 1984 conference ended with the setting of March 30 for submission of pretrial briefs and April 30 for a bench trial.6

On February 23, 1984, the court issued a Third Order for Pretrial Preparation and Trial in which it denied SRI's request for jury trial and ordered the bench trial discussed in the foregoing quote:

It appearing that there are no disputed issues of fact requiring determination by a jury; it is hereby

ORDERED, ADJUDGED, AND DECREED that the liability phase of this case shall be tried to the Court in accordance with the following schedule ...

The order then repeated the bench-trial requirement for filing narrative statements of testimony, exhibits, and objections.

(c) April 13, 1984 Pretrial Conference

On April 13, 1984, at what proved to be the last pretrial conference and last courtroom event, the court conducted an extended dialogue with SRI's counsel, beginning with the court's demand that counsel state the "essence" of the '633 patent and "the novel element on the basis of which that patent was issued." The court asked SRI's counsel whether the assertions in MEI's brief (claims are limited to filters so operated that the angle difference of the stripes creates different frequencies) stated "the essence of the patent".

Counsel for SRI began correctly by stating the structural limitations of the claims. When the court said the "essence" was "the difference in the angles of the two sets of stripes creates different frequencies for the transmission of red and blue color," counsel said "stripes at an angle to one another and creating different frequencies" was old and that the "novel feature" was the equal width and spacing of the stripes.

Pressed by the court on whether "the basis on which the patent was issued" was "two sets of stripes being at an angle to one another" and "for the purpose of generating different frequencies," SRI's counsel finally, and inexplicably, said, "[t]hat's correct."7

The court then said MEI's filter does not generate frequency differences. When SRI's counsel said it did, the court demanded an explanation. Pleading that inventor Macovski could explain it better, counsel said MEI's 1-H delay resulted in frequency differences without which no camera would work.

Pointing to a statement in a brief filed a year earlier (April 29, 1983) by SRI's counsel (that MEI's was a "phase" system), the court deemed counsel's statement in the April 13, 1984 conference (that MEI's system generated two frequencies, albeit in a different way) an improper and possibly punishable change of position.8

Counsel said he had learned more during the year, and that his expert witnesses and a paper by MEI's employee, Nakabe, would at trial show the correctness of his present statement.

When the court pointed out that "tenth grade geometry" shows no difference in spacing across and between MEI's stripes, SRI's counsel agreed, saying that, "[t]here is no frequency difference on a given scan line," but that "MEI's 1-H delay produced frequency differences."

When the court asked whether the real issue was whether the '633 patent "protects a system" which generates color differences by a time delay in rate of scanning between different lines, counsel answered, "Yes." The court then asked whether the patent or file wrapper said anywhere that "an essence or novel idea in this patent to be protected is the generation of frequency differences through time delays." Counsel for SRI sought to answer by citing references in the specification to frequency overlap.

Invited to comment, MEI's counsel simply agreed, in three sentences, with what the court had been saying, i.e., that use of "phase" and "frequency" was mere "semantics" and that nothing in the '633 patent suggests MEI's "technique", at which point the court said, "Well, I don't see why I shouldn't grant summary judgment in this case."

Referring repeatedly to the statement about "phase" in the year-old brief of SRI's counsel, the court rejected counsel's promise of what Dr. Macovski would show at trial and counsel's assertions that those skilled in the art would immediately on reading the '633 patent recognize the availability of what counsel called the minor changes made by MEI.

The court then asked MEI's counsel whether he desired a trial or summary judgment. MEI's counsel responded by offering to have his narrative witness statements sworn. The court said there was no need for any statements, because MEI's exhibits and the year-old statement of SRI's counsel removed all controversy.

Recognizing that it had surprised SRI, the court set a schedule for briefing on summary judgment. SRI accompanied its brief with an affidavit of Dr. Macovski. MEI filed no affidavit.

On August 1, 1984, after considering counsels' voluminous submissions,9 the district court entered summary judgment in favor of MEI.

Whether the district court erred in granting summary judgment of non-infringement.

(1) Introduction

The Federal Rules of Civil and Appellate Procedure and of Evidence are and should be applied in patent cases no differently from their application in any other type of case. Hence summary judgment under Rule 56, Fed.R.Civ.P., is entirely appropriate, in a patent as in any other case, where there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. See Molinaro v. Fannon/Courier Corp., 745 F.2d 651, 653-54, 223 USPQ 706, 707 (Fed.Cir.1984); Chore-Time Equipment, Inc. v. Cumberland Corp., 713 F.2d 774, 778, 218 USPQ 673, 675 (Fed.Cir.1983). The movant bears the burden of demonstrating absence of all genuine issues of material fact, Cooper v. Ford Motor Co., 748 F.2d 677, 679, 223 USPQ 1286, 1287-88 (Fed.Cir.1984), the district court must view the evidence in a light most favorable to the nonmovant and draw all reasonable inferences in its favor, United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962), Martin v. Barber, 755 F.2d 1564, 1566, 225 USPQ 233, 234 (Fed.Cir.1985), and must resolve all doubt over factual issues in favor of the party opposing summary judgment, Palumbo v. Don-Joy Co., 762 F.2d 969, 973, 226 USPQ 5, 7 (Fed.Cir.1985).10

The party opposing the motion must point to an evidentiary conflict created on the record; mere denials or conclusory statements are insufficient. Barmag Barmer Maschinenfabrik AG v. Murata Machinery, Ltd., 731 F.2d 831, 836, 221 USPQ 561, 564 (Fed.Cir.1984). Because, however, infringement is itself a fact issue, a district court must approach a motion for summary judgment of infringement or non-infringement with a care proportioned to the likelihood of its being inappropriate. D.M.I., Inc. v. Deere & Co., 755 F.2d 1570, 1573, 225 USPQ 236, 238 (Fed.Cir.1985); Palumbo v. Don-Joy Co., 762 F.2d 974, 226 USPQ at 8.

Though speedy and inexpensive, summary judgment is nonetheless a "lethal weapon" capable of "overkill". Brunswick v. Vineberg, 370 F.2d 605, 612 (5th Cir.1967). See generally Louis, Federal Summary Judgment Doctrine: A Critical Analysis, 83 Yale L.Rev. 745 (1974). It denies the non-movant its "day", i.e. a trial, in court. Moreover, experience has shown that a trial often establishes facts and inferences not gleanable from papers submitted pre-trial. Further, a reversal of summary judgment on appeal is not dispositive, but merely remits the case for trial. If reversal be error, that error will manifest itself at close of the non-movant's case, when the district court may direct a verdict or enter judgment accordingly.

In the present case, the admirable and extensive pretrial preparation system designed and vigorously managed by the district court, moved from preparation for a jury trial, through determination of whether the jury demand should be granted, to preparation for a bench trial, to the court's examination of unsworn counsel, to the court's study of exhibits and unsworn narrative statements, and finally to a grant of summary judgment. Counsel did not supply the clear, candid, and uncompromising explication of the law required to protect the pretrial preparation system in this instance from error.

As was stated in Cable Electric Products, Inc. v. Genmark, Inc., 770 F.2d 1015 (Fed.Cir.1985), "the circumstances appropriate to summary judgment are those in which a district court is able to conclude that, with regard to any factual issues material to granting judgment as a matter of law, no genuine dispute exists." Here there was no dispute on the structure of MEI's filter and camera, and no dispute on the manner in which that structure is operated, but there was a dispute, as discussed infra, on whether that manner of operation meant that MEI's structure was so far changed in principle that it performed the same or similar function as the claimed invention in a substantially different way. As discussed, infra, that disputed question raises a genuine issue of material fact and the answer to that question controls the issue of infringement in this case.

Focusing exclusively on the way the structure of the Figure 1 embodiment in the specification operates, the district court allowed that focus to control its claim interpretation and its grant of summary judgment. In so doing, it erred.

(2) The Claims Read on MEI's Structure

The claims are structural, not method, claims. MEI did not in its brief before us concede that the claims as written read directly on its filter and camera.11 Because MEI's argument is based entirely on its " technique", i.e., on how its structure and that disclosed in Figure 1 of SRI's specification (or SRI's commercial embodiment) are operated, a concession that its structure falls literally within the words of the structural claims in suit would have saved time and cost for all concerned by focusing on the sole actual infringement issue present, which, as discussed below, centers on the so-called "reverse doctrine of equivalents", i.e. no infringement in law, in spite of literal correspondence with the claim language, because the product or process alleged as an infringement is not actually the invention patented.

The factual issue is whether MEI's filter and camera infringe properly interpreted claims. Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565, 1569, 219 USPQ 1137, 1140 (Fed.Cir.1983). Nothing in the present record would justify a determination that literal correspondence with claim 1, for example, is avoided by a composite filter structure formed of grids with equi-width stripes superimposed in their entireties at equal and opposite angles to the vertical to derive information for reproducing an image in color, i.e., the MEI filter.

The language of the claims themselves is clear, definite, and unambiguous. It reads directly, unequivocally, and word-for-word on MEI's structure. As above indicated and as the district court correctly noted, there is no factual dispute concerning the structure of MEI's filter. It is undisputed that MEI's filter employs "relatively angularly superimposed" grids. The asserted claims, as the district court appeared to sense, are therefore literally met. If literal correspondence with the language of the claims were the sole consideration, SRI would on the present record be entitled to summary judgment, because there is no issue of genuine material fact that could affect that consideration.

Determination of actual infringement is not in every case, however, limited to literalism. An accused infringer, as here, may argue that the claim language, as properly interpreted, does not actually read on his device. See Leesona v. United States, 530 F.2d 896, 906, 208 Ct.Cl. 871, 887-88, 185 USPQ 156, 163 (aff'd 192 USPQ 672) (1976) ("more than a literal response to the terms of the claims must be shown to make out a case of infringement"). Where, as here, a defendant says the claim language, as interpreted in light of the specification, prosecution history, and prior art, does not actually read on his device, claim interpretation is required. If the presently asserted claims must be interpreted as limited to a structure that is operated in the precise manner in which Figure 1 of the specification is operated, a structure not operated in that manner would not be an actual infringement. As appears below, however, nothing of record requires that the asserted claims be so limited.

(3) Claim Interpretation

Claim interpretation or construction is a legal matter subject to review free of the clearly erroneous standard applicable to fact findings. Raytheon Co. v. Roper Corp., 724 F.2d 951, 956, 220 USPQ 592, 596 (Fed.Cir.1983); Fromson, supra, 720 F.2d at 1569, 219 USPQ at 1140. In construing claims, the prosecution history is a useful tool, McGill Inc. v. John Zink Co., 736 F.2d 666, 673, 221 USPQ 944, 949 (Fed.Cir.1984), as is the patent specification, Fromson, 720 F.2d at 1569, 219 USPQ at 1140.

A claim is construed in the light of the claim language, the other claims, the prior art, the prosecution history, and the specification, not in light of the accused device. Contrary to what MEI's counsel wrote the district court, claims are not construed "to cover" or "not to cover" the accused device. That procedure would make infringement a matter of judicial whim. It is only after the claims have been construed without reference to the accused device that the claims, as so construed, are applied to the accused device to determine infringement. See Palumbo v. Don-Joy Co., 762 F.2d at 974, 226 USPQ at 8.(i) Prosecution History12

Responding to the examiner's initial rejection of certain claims in view of Kell, U.S. Patent No. 2,733,291, SRI entered extended Remarks in which it distinguished Kell on a number of different bases. Among those Remarks were these:

Claim 1, as amended, distinguishes over Kell in calling for a spatial filter which is comprised of a first grid of parallel spaced lines having the color of a subtractive primary, and a second grid which is relatively angularly superimposed over all of said first grid, said second grid having parallel spaced lines which are the color of another subtractive primary.... Claim 1 further distinguishes over Kell in calling for each grid to have the same line density. Every teaching in Kell, both in the specification and in the drawings, ... is that the line density is different for each grid. [Emphasis in original.]

The reason why Kell makes his line density different for each grid is that that is the way that he generates his two different modulating frequencies. This applicant insures two different modulating frequencies by virtue of placing one grid at an angle to another grid. As a result, the scanning beam, which traverses the line grids in successive parallel lines, is interrupted at two different frequencies by the two angularly disposed lines of the two grids.

At the April 13, 1984 conference, the court intensively examined SRI's counsel, focusing on and reading aloud the second of the two paragraphs above quoted. Continuing, the court said:

Do you accept that statement?

MR. GREGG: That's correct.

THE COURT: And that's the essence of the '633 patent, is it not?

MR. GREGG: That's part of the essence, bearing in mind what the statute ... 35 U.S.C. Sec. 103, has to say, ... that you must look at the invention as a whole. And in connection with claim one, it is the filter; in connection with claim seven, for example, it is the entire camera, with the filter in it.

The district court in its Memorandum Opinion quoted the middle sentence of the paragraph it read aloud: "[T]his applicant insures two different modulating frequencies by virtue of placing one grid at an angle to another grid," and held that the claims must therefore be interpreted as limited to composite filters with angled stripes that themselves generate "two different modulating frequencies" when scanned in one pass. 591 F.Supp. at 470, 224 USPQ at 75. Because it found that MEI's angled stripes themselves generate the same modulating frequency in one pass, the court thought there could be no infringement of the structural claims in suit.

Unlike the patentees in Prodyne Enterprises, Inc. v. Julie Pomerantz, Inc., 743 F.2d 1581, 223 USPQ 477 (Fed.Cir.1984) and