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Federal Circuit Issues Judgment to DSW in Shoe Display Patent Dispute with Shoe Pavilion
DSW, Inc. v. Shoe Pavilion, Inc.
No. 08-1085, U.S. Court of Appeals for the Federal Circuit, 08/19/2008
Companies Mentioned: DSW Shoe Warehouse, Inc., DSW, Inc., Shoe Pavilion, Inc.
Holding
In a patent dispute over store display methods between shoe retailers DSW and Shoe Pavilion, the U.S. Court of Appeals for the Federal Circuit ruled that DSW's patents were valid, and that Shoe Pavilion should pay the patentee damages for infringement. In reversing the district court's summary judgment, the Federal Circuit held that the district court did not construe or clarify the meaning of actual words in certain patent claims, but improperly read into them a new limitation not required by the claim language, specification, or prosecution history. On remand, the district court should compare the properly construed patent claims to Shoe Pavilion's modified display design to determine whether it infringed. With respect to the district court's summary judgment of no liability, the Federal District held that the district court misapplied the standard expressed in a Supreme Court precedent. In this regard, the district court erred in concluding that Shoe Pavilion’s reasonable steps and good faith efforts to bring its infringing activity to a timely end equated to an immediate cessation. Without a doubt, the law offers an infringer no exception to liability for the time it takes to terminate infringing activities, no matter how expeditious and reasonable its efforts. Thus, if the patents at issue were valid, damages were owed on the design for the 6-7 months of continued infringement while Shoe Pavilion phased out use of the displays in its stores.
Detailed Summary
Plaintiff-appellant DSW, Inc. and DSW Shoe Warehouse, Inc. (together “DSW”) appealed the judgment of the United States District Court for the Central District of California, granting summary judgment of non-infringement of its ‘622 patent in favor of Shoe Pavilion, Inc. (“Shoe Pavilion”), and summary judgment of no liability for damages for past infringement of its ’172 patent and the ’622 patent, also in favor of Shoe Pavilion. Opinion, p. 1, citing DSW Inc. v. Shoe Pavilion, Inc., No. 2:06-CV-06854-FMC-SHx (C.D. Cal. Sept. 25, 2007) (“Summary Judgment Order”).
By way of background, DSW owned the ’622 patent, which teaches a system and method for storing and displaying a large stock of footwear for customer self-service. DSW also owned the ’172 patent, which claims an ornamental design for a combined product display and stacked product container separator. Id., p.2.
On May 19, 2006, DSW notified Shoe Pavilion that the then-current shoe display design (“First Design”) in five of its stores infringed DSW’s ’622 and ’172 patents. Shoe Pavilion responded to the notice, and agreed to modify its First Design to avoid infringement. Within seven months of DSW’s notification of infringement, Shoe Pavilion removed all First Design displays from its stores and replaced them with a modified design (“New Design”). Id.
On October 27, 2006, DSW filed suit against Shoe Pavilion for patent infringement, alleging that Shoe Pavilion’s manufacture and use of its New Design footwear displays in seven of its California stores also infringed claims 4-6 of the ’622 patent, and that Shoe Pavilion owed damages for infringement of the ’172 and ’622 patents by the First Design. Shoe Pavilion moved for summary judgment that its New Design footwear displays did not infringe, or, in the alternative, that the ’622 patent is invalid, and that it owed no damages for infringement by the First Design. Id.
Relying on the specification and the prosecution history, the district court agreed with Shoe Pavilion that method claims 4-6 were not independent and separately patentable from claims 1-3. Specifically, it found that (1) the examiner’s reasons for allowance indicated that the Track and Roller Limitation was the seminal feature distinguishing the ’622 patent over the prior art, (2) claims 4-6 would be invalid as indefinite without the limitation, and (3) the specification describes the invention as a modular footwear display and storage system, and claims 1-3 recite a footwear display and stack divider module connected by a module support member containing the Track and Roller Limitation. Id., pp. 5-6.
With respect to damages, the district court found that DSW was not entitled to any damages as a matter of law, because immediately upon receipt of DSW’s notice of infringement of the ’172 and ’622 patents by the First Design, Shoe Pavilion took reasonable steps and timely removed all of the infringing shoe displays. Citing Wine Railway Appliance Co. v. Enterprise Railway Equipment, 297 U.S. 387 (1936), the district court granted summary judgment to Shoe Pavilion and stated that no damages for infringement are recoverable by a plaintiff unless the infringing activity continues after notice is provided to the infringer.
In this appeal, the Federal Circuit reversed. Specifically, it held that the district court did not construe or clarify the meaning of actual words in claims 4-6, but improperly read into them a new limitation not required by the claim language, specification, or prosecution history. Id., p. 9.
According to the Federal Circuit, because claims 4-6 are unambiguous, contain limitations other than the disputed claim term, and are directed to a method for using an apparatus, not to its structure or assembly, it was improper for the district court to import limitations from the apparatus and system claims into the method claims. Id.
Shoe Pavilion conceded that its New Design includes storage and display of vertically stacked boxes of footwear, separated by vertically disposed dividers that may be selectively positioned through use of a clip on a track. On remand, the district court should compare the properly construed ’622 patent claims to the New Design to determine whether it infringed. Id., p. 10.
With respect to the district court’s summary judgment of no liability, the Federal District held that the district court misapplied the standard expressed by the Supreme Court in Wine Railway, which held that under the predecessor statute to the notice provision of 35 U.S.C. § 287, a patentee who failed to mark his patented article with the appropriate patent number could only recover damages for infringement occurring after actual notice was provided the infringer. Id., p. 10, citing Wine Ry., 297 U.S. at 393-94.
The Federal District explained that Wine Railway provides no support for the district court’s summary judgment on damages. The issue here was whether Shoe Pavilion is liable for damages to DSW for infringement occurring subsequent to receipt of actual notice, and Wine Railway flatly states that a patentee may indeed recover damages for infringement that continues after actual notice is provided. Id., p. 10, citing Wine Ry., 297 U.S. at 393-94. Without a doubt, the law offers an infringer no exception to liability for the time it takes to terminate infringing activities, no matter how expeditious and reasonable its efforts. Id., referring to In re Seagate Tech., Inc., 497 F.3d 1360, 1368 (Fed. Cir. 2007).
In this regard, the district court erred in concluding that Shoe Pavilion’s reasonable steps and good faith efforts to bring its infringing activity to a timely end equated to an immediate cessation. Thus, if the patents at issue were valid, damages were owed on the design for the 6-7 months of continued infringement while Shoe Pavilion phased out use of the displays in its stores. Id., p. 11.
On the basis of the foregoing, the Federal Circuit reversed the district court’s summary judgment issued to Shoe Pavilion, and remanded the case for further proceedings.
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